Millions of nonhomeowner households still fall short of starter-home prices

The typical nonhomeowner household is $7,099 short of the income needed to buy a starter home, leaving just 37.6% of nonhomeowner households able to afford one nationwide. LendingTree’s June 29, 2026 analysis pegs the annual income required at $62,099 and the average starter home at $200,000, using a benchmark of owner-occupied properties at the 25th percentile of the housing market.

The squeeze is not evenly distributed. Rhode Island is the least affordable state for aspiring buyers who do not already own a home, with only 16.5% able to afford a starter home there. California has the nation’s largest dollar shortfall, showing how far the entry point has moved beyond what many renters and would-be first-time buyers can pay.

The bigger problem is supply. Freddie Mac estimated the U.S. housing shortage at 3.7 million units as of the third quarter of 2024 and said the deficit has been worsened by a long decline in single-family construction, especially at the bottom of the market. In Freddie Mac’s 2021 research, entry-level homes accounted for 40% of new construction in the early 1980s, but only 7% in 2019. Builders averaged 418,000 entry-level units a year from 1976 to 1979, a scale that has never been matched by today’s market.

That shortage shows up in the buyers who do manage to get in. The National Association of Realtors said in its 2024 Profile of Home Buyers and Sellers that the median age of first-time buyers hit a record 38 years old, up from 35 in 2023. First-time buyers made up 24% of all buyers, the lowest share since tracking began in 1981, while first-time buyer household income climbed to $97,000, up $26,000 over the prior two years.

Taken together, the numbers show how the starter-home rung has become harder to reach even before a buyer starts bidding. The gap is now defined as much by the missing supply of modest homes as by the monthly payment attached to them, and in many major markets the first home is no longer the easy entry point it once was.