In a show of optimism for first-time homebuyers, the starter-home market is beginning to recover. In July, pending sales of starter homes increased by 10.2% year-over-year, marking the highest level since October 2022, according to housing market platform Redfin. Comparatively, in other price tiers, sales of middle-priced homes fell by 6.5% and sales of upper-priced homes dropped by 10%. The typical U.S. starter home sold for a record $250,000 in July, up 4.2% from the same time last year. However, this growth was slower than that of middle- and upper-priced homes, which saw prices rise by 4.6% and 5%, respectively.
“The overall market remains sluggish, but we are beginning to see first-time homebuyers come off the sidelines, buoyed by falling mortgage rates and an increased number of homes hitting the market,” said Redfin Senior Economist Sheharyar Bokhari. “Not only do you have young families and investors looking at starter homes, you also have buyers who have been forced to consider less-expensive options due to near-record home prices. More buyers means more sales, but so far we aren’t seeing prices skyrocket, because the rising number of homes hitting the market is enough to satisfy the increased demand—a positive outcome for both buyers and sellers.”
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