Starter-Home Sales Surge With Inventory at Nine-Year High
Starter-home sales are showing resilience in the broader housing market, with October enjoying a near 5% increase year-over-year. Buyers are focused on the most affordable homes, which have seen modest price growth and a growing supply, according to Redfin’s latest market report.
Starter-home sales jumped 4.9%, mid-priced homes increased 0.7% and high-priced homes rose 0.8% year-over-year, marking a notable turnaround after months of declines across those tiers. Mortgage rates remaining below 6.5% in recent months also contributed to the uptick, helping mid and high-priced homes move into positive territory. Pending-sales data from the report reflects a similar trend, with starter homes showing the largest increase at 5.5%, followed by mid-priced at 1.4% and upper-tier ones at 1.1%.
Additionally, active listings rose 13%, pushing starter-home inventory to its highest October level since 2016.
Meanwhile Redfin’s Head of Economic Research, Chen Zhao, described the starter-home market as a double-edged sword.
“Conditions are improving, with more listings and steadier prices, but many buyers are only turning to this tier because they have been priced out of higher tiers,” Zhao said.
“That means sales at the low end of the market are relatively strong, but first-time buyers may find themselves competing with move-up or move-down buyers.”
Pricing is a different story, as the typical U.S. starter home sold for a median of $260,000 in October, up just 2% from the same month last year and the second slowest growth in the past decade, trailing only April 2024 when mortgage rates were above 7.5%. The median price of mid-priced homes rose 1.8% to $373,249 and top-tier ones increased 3.1% to $577,593, also reflecting near-decade lows in valuation growth. Inventory expanded across all tiers, though most sharply for starter homes and Redfin analysts noted that much of the increase in overall listings came from homes lingering on the market rather than a surge of new sellers.
Regionally, Redfin data show starter-home prices rose fastest in Milwaukee, St. Louis and Detroit, while declines were largest in Jacksonville, Austin and San Antonio. Sales gains were strongest in San Francisco, Providence and Portland, whereas San Antonio, Detroit and Nashville saw the largest drops.
Inventory expanded most in Las Vegas, Newark and San Diego, with declines in San Francisco, San Jose and Tampa. New starter-home listings increased in Newark, Detroit and St. Louis, but fell in Jacksonville, San Antonio and Orlando. In terms of speed, starter homes sold the fastest in Indianapolis, Warren, Michigan, Boston and Kansas City, while transactions took the longest in Fort Lauderdale, West Palm Beach and Miami.
Source: GlobeSt/ALM