The median sale price for a starter home reached $260,508, up 2.2% from last year
Starter-home sales in the US surged nearly 4% year over year in August, marking the twelfth straight month of gains and underscoring a persistent affordability divide in the housing market.
The median sale price for a starter home reached a record $260,508, up 2.2% from last year, according to a Redfin analysis.
In contrast, sales of mid- and high-priced homes slipped 0.6% and 1.2%, respectively, as buyers balked at elevated prices and mortgage rates.
“Starter homes are holding up better than other price points because they’re the most attainable option in a market where affordability is still stretched,” said Redfin Senior Economist Sheharyar Bokhari.
“First-time buyers and downsizers alike are competing for the same pool of smaller, less expensive homes, which is keeping demand relatively strong even as higher tiers remain sluggish. For many households, stretching into the mid-tier isn’t feasible with high prices and elevated mortgage rates.”
Mortgage rates and buyer leverage shift the landscape
Another Redfin analysis found that 19.7% of homeowners now have mortgage rates at or above 6%—the highest since 2015. At the same time, only 52.5% of homeowners have rates below 4%, down from nearly two-thirds in early 2022.
David Palmer, a Redfin Premier real estate agent in Seattle, said first-time buyers face tough odds: “Starter home prices have climbed so much over the last decade that even with mortgage rates coming down from their peak, affordability is still a huge hurdle."
He added that current homeowners have more leverage, using their equity to make stronger offers—leaving first-time buyers at a disadvantage against move-up buyers with more resources.
On the other hand, Kurt Brandly of Greenside Capital told Mortgage Professional America that borrowers have mostly adjusted to higher rates and no longer expect the low rates seen during the pandemic.
“It’s been our reality now for three-plus years and people have started to accept that interest rates are going to be in this area – and at least higher than 2020-21 – for some time," he said.
“So they’ve kind of accepted that this is the market, and they still have homes that they want to purchase. People are still having families. Their incomes are increasing. They’re still out there looking for homes and they’ve accepted that the market is what it is. That’s why we still see purchase volume going up.”
Lower mortgage rates could finally loosen the golden handcuffs holding homeowners back—says Brian Mozley, Chief Growth Officer at Choice Mortgage Group.https://t.co/r8aIpbxM39
— Mortgage Professional America Magazine (@MPAMagazineUS) September 23, 2025
Inventory grows, but regional differences persist
Starter-home inventory jumped 16.4% year over year, reaching the highest August level since 2016. However, new listings barely budged, up just 0.3%, suggesting that while more homes are available, sellers remain cautious.
Inventory growth for mid- and high-priced homes also slowed, rising 13.4% and 12.5%, respectively.
Providence, RI, led all major metros with a 25% spike in starter-home sales, while San Antonio saw the steepest drop at 10%.
Milwaukee and Detroit posted the largest price gains, up 14.9% and 13.7%, respectively, while Austin and Jacksonville recorded notable declines.
Despite the uptick in starter-home sales, affordability remains a challenge. Mortgage rates, though recently off their highs, continue to limit many buyers’ options.
Homes across all price tiers took roughly the same time to sell—about 41 days on average—while just over a third of starter homes went under contract within two weeks, mirroring trends in pricier segments.
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