A Subtle Turn for First-Time Buyers
New construction trends hint at changing priorities, suggesting the market may be edging toward options that better align with first-time buyer budgets.
NEW YORK – The starter home may be making a quiet comeback in some communities, as construction firms look to add inventory that first-time home buyers can afford.
Over the years, the starter home – smaller properties typically intended for couples or young families – have disappeared among home inventory options. In today's housing market, interest rates and home prices are on the rise, with housing prices increasing to seven figures in some states before insurance and other costs are calculated. As a result, a number of first-time home buyers are opting for an older house as their first property, which can carry repair risks and unexpected expenses.
A recent Realtor.com analysis of nationwide building permit data indicates that the size of a median new build shrunk to 1,965 square feet in 2024 from 2,128 square feet in 2022. Starter homes can offer a way for homeowners to enter the market and possibly keep them to rent out as their families grow and their housing needs change.
According to Realtor.com senior economist Joel Berner, these smaller homes are a jumping-off point of household wealth. He adds, "The free market is absolutely capable of meeting demand for starter homes if price signals indicate that it exists. Supply-side solutions, meaning building homes of all types and prices, are the only long-term solution to the housing shortage in the country."
Source: Realtor.com (02/26) Navera, Tristan
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