After years of rising housing costs, a majority of Americans believe that the starter home is dead and that the promise held by this type of property—an affordable option for first-time buyers wanting to step onto the property ladder—no longer exists.
A new survey commissioned by NerdWallet and conducted by Harris Poll found that 61 percent of U.S. adults believe starter homes are a relic, like payphones and smoking in restaurants. The survey ran between April 7 and 9 and polled 2,070 U.S. adults aged 18 and above.
Is their opinion a response to the growing pessimism surrounding the U.S. economy and the country’s housing affordability crisis or a sign that something has gone deeply wrong in America in the past few years?
Looking at the recent data, experts told Newsweek that starter homes are, in fact, quickly vanishing from the market, and that disappearing act might significantly change American society, and not for the better.
What Is the Situation for First-Time Buyers?
The latest figures from the housing market show that Americans are struggling with housing costs and stepping onto the property ladder has become harder.
The median age of first-time homebuyers in the U.S. reached 40 last year, according to data by the National Association of Realtors (NAR), an all-time record. And the first-time homebuyer share fell to a historic low of 21 percent.
That is partly because homes are now much more expensive than they were before the COVID-19 pandemic, when a homebuying frenzy clashed with a chronic lack of inventory across the country, bringing prices through the roof.
As of March 2026, the median sale price of a typical U.S. home was $436,523, based on Redfin data, up from $431,544 a year earlier and $295,100 in March 2019.
Starter homes are typically smaller and cheaper than other properties on the market, with Zillow estimating that the national value for a typical starter was $195,388 by the end of 2025.
But because they are so in demand—especially as more would-be buyers get pushed to the sidelines of the market—starter home value appreciation has far outpaced other types of homes in the U.S., Zillow reported.
There are a few ways to define a starter home, but most have to do with price tag and size.
“We most often use a price cutoff of 80 percent of the area median, but researchers also look at bedroom count, square footage and absolute price thresholds,” Hannah Jones, senior economic research analyst at Realtor.com, told Newsweek.
Starter homes have become more expensive no matter how you define them.
“By the price-based definition, starter home prices have risen at the same rate as the overall market, climbing from $252,000 in April 2019 to $340,000 in April 2026, a 34.9 percent increase over seven years,” she said.
“Looking at the bedroom count tells a sharper story. Single-family homes with two or fewer bedrooms, about 12 percent of all listings, saw prices rise 77.2 percent over the same period, and homes with three or fewer bedrooms were up 51.4 percent, both well ahead of median price growth. Smaller homes have gotten more expensive faster.”
In 233 U.S. cities, the typical starter home was worth at least $1 million by late 2025, according to Zillow—five times more than the national average.
Starter homes have gotten more expensive because they have also become bigger over the past few years.
“Only about 11 percent of new construction sales are homes under 1,400 square feet, and that number has barely budged since 2019,” Daryl Fairweather, chief economist at Redfin, told Newsweek. “In 2025, just 58,000 small new builds sold compared to 256,000 large ones [over 2,000 square feet].
“Builders are overwhelmingly building larger, more expensive homes. The median new-construction home is about 2,000 square feet, nearly 300 square feet larger than the median existing home. There is a massive structural undersupply of new entry-level products.”
The reasons developers are ditching starter homes is that they are generally less profitable and harder to build because of zoning restrictions and complex regulations.
“Our data shows the price per square foot on small new builds [$233 per square foot] is actually higher than large new builds [$203 per square foot], so buyers are paying a premium for small homes,” Fairweather explained. “But that doesn’t translate to builder profits because the fixed costs of construction [permitting, site prep, utility hookups, labor mobilization] are roughly the same whether you’re building 1,200 square feet or 2,400 square feet.”
The margin on a $530,000 large home is far better than a $285,000 small one for developers, discouraging them from building new starter homes.
“On top of that, zoning in most suburban jurisdictions mandates minimum lot sizes, setbacks and parking minimums that effectively make it illegal to build the small homes on small lots that would pencil out economically. Builders can’t spread land costs across enough units,” Fairweather said.
Mortgage payments are also much higher now than they were six years ago. The monthly mortgage payment of someone who purchased an average home at the end of last year, according to NerdWallet, is $3,300, assuming a 10 percent down payment.
It matters because it is why many homeowners are staying locked in the starter homes they bought before or during the pandemic, preventing an essential “turnover” in the U.S. housing market.
Do Starter Homes Still Exist?
Starter homes still exist, but they are rare to find—and they are often not the bargain they traditionally have been.
In 2019, 62 percent of home sales were under $300,000, Fairweather said. Today, it’s 39 percent. Within the same period, homes under $200,000 have gone from 40 percent of sales to 21 percent.
“The starter home hasn’t disappeared entirely, but it has become far less accessible,” Fairweather said. “The national median price just crossed $396,000 [as of April, up 2.4 percent year-over-year], with four months of supply. Starter homes exist mostly in the existing housing stock of older, smaller homes, not in what’s being built new.”
According to Realtor.com data, the pool of homes priced at $350,000 or below has also shrunk significantly, falling from roughly 60 percent of all for-sale listings in the first quarter of 2019 to about 40 percent in the first quarter of 2026.
“The homes that remain in that price range are also smaller than they used to be, with median square footage in the sub-$350,000 segment dropping from around 1,500 square feet to about 1,200 over the same period,” Jones said. “Buyers at the affordable end of the market are paying more and getting less space.”
Even in places where there are more homes available, “they tend to go fast, which can exacerbate the perception that these homes aren’t there,” Wood said. “There’s so much pent-up demand, especially among Gen Z and millennial first-timer buyers, that move-in ready homes that are priced affordably will get snapped up right away.”
While demand for starter homes is still high, builders “clearly don’t want to build them given current economics,” Fairweather said.
New construction has actually been drifting away from small, she explained, with the share of new builds under 1,400 square feet dropping from 12.2 percent in 2021 to 10.9 percent in 2026.
“Builders are rational actors: they maximize returns per lot, and the regulatory and economic structure rewards them for building bigger,” Fairweather said.
There are, however, bright spots in the otherwise gloomy nationwide landscape.
“In the Austin [Texas] metro, for example, 53.3 percent of newly built homes were priced below the metro median in the first quarter of 2019, and that share had grown to 60.7 percent by the first quarter of 2026,” Jones said. “Stable or rising entry-level construction shares are most common in Sun Belt metros where builders are more active and zoning is more permissive.”
This geographic pattern is not a coincidence. Newly built starter homes are concentrated in suburban areas where land is cheaper and the economics of entry-level construction are more viable, Jones explained.
“Building affordable homes in high-cost, land-constrained urban markets remains structurally difficult regardless of demand, because the cost floor for new construction leaves little room to price at levels first-time buyers can actually qualify for,” she said. “In the places where first-time buyers face the steepest affordability barriers and need an entry point, most affordable inventory tends to be the scarcest.”
In places with a lot of zoning regulations and less space to build, like New England and the coastal Mid-Atlantic states, “you don’t have as many townhome communities or other more affordable housing developments,” NerdWallet lending expert Kate Wood told Newsweek. “Existing housing stock is older, and not all first-time buyers have an appetite for fixer-uppers—repairs and renovations can quickly overtake the cost savings from a lower listing price.”
What Does This Mean for Americans?
For millions of Americans over the past several decades, buying a starter home represented a key way to build equity and eventually move on to bigger, better properties—maybe even their dream home.
Every person who cannot buy a home is losing an opportunity to build equity and be more financially stable later in life. According to a recent Realtor.com report, those who buy a home at age 30 have 22.5 percent greater net worth at age 50 compared to those who buy in their mid-to-late 40s.
“Every year, a household spends renting rather than accumulating equity is a year of wealth-building that cannot be recovered,” Jones said. “When the entry point to ownership disappears, the gap between those who got in and those who could not widens in ways that persist long after housing markets eventually rebalance.”
The vanishing of starter homes from the market “means homeownership becomes a privilege of inheritance and high income rather than a milestone of middle-class life,” Fairweather said. “When the entry rung of the ladder is missing, people stay renters longer, build less wealth, have less housing stability, and face greater vulnerability to displacement.
“It also concentrates housing wealth among existing owners, widening inequality across generational and racial lines. We’re already seeing it: the homeownership rate for under-35s has stagnated even as overall rates recovered. If we don’t fix the zoning and incentive structures that make small homes unbuildable, we’re accepting a permanently stratified housing market.”
A majority of Americans are already not feeling great about the economy and the housing market.
A CNN poll published this week found that 55 percent of U.S. voters believe the economy and the cost of living are the most important issue facing the country, but only 30 percent approve of how President Donald Trump is handling the U.S. economy. Roughly two-thirds believe that the administration’s policies have worsened economic conditions in the country.
The housing market—and the ongoing affordability crisis—plays a crucial role in their growing discontent.
A poll released by Gallup in April found that inflation and high prices were the number one concerns for U.S. voters (31 percent), followed by housing costs (13 percent). And another poll issued this month by the Bipartisan Policy Center found that 79 percent of Americans identified the cost of housing as an extremely or very important issue.
As much as Americans still dream of homeownership, many are giving up on achieving this milestone anytime soon. A majority of 67 percent of U.S. adults think now is a bad time to buy a home, according to an April survey by Gallup, and only 25 percent of non-homeowners think they will buy a home within the next five years.
This is a stark contrast from the years preceding the pandemic homebuying frenzy. Between 2013 and 2018, non-homeowners’ intentions to buy a home within five years were between 41 percent and 49 percent.
And despite Trump’s promise to lower the cost of housing, 65 percent of Americans told Gallup they think home prices will increase in the next year.
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