Despite Cost Increases, Starter-Home Sales Rise

Even as starter-home prices grew by more than 2% in August, sales increased for the 12th consecutive month

Sept. 30, 2025

2 min read

Exterior of a starter home — More homebuyers are looking to starter homes as prices rise across all segments of the housing market.

As home prices continue to rise, more buyers are considering starter homes as a viable option for their next purchase, and because of this demand, starter-home prices have gone up over the past year. According to real estate marketing platform Redfin, the median sale price of starter homes in the U.S. hit a record $260,508 in August, up 2.2% from a year earlier. Comparatively, home prices in the mid- and high-end market grew by 1.4% and 2.7% year-over-year, respectively, to $370,000 and $575,000.

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. 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.
- Sheharyar Bokhari, Redfin Senior Economist

Starter-home sales grew in August

Starter-home sales increased by 3.8% year-over-year, rising for the 12th consecutive month to the highest August level in three years. Comparatively, sales of mid-price homes fell by 0.6%, and sales of homes in the high-end market increased by just 1.2% during this time.

Additionally, pending sales of starter homes were up by 3.1% in August. Meanwhile, pending sales of mid- and high-price homes fell by 0.1% and 0.8% year-over-year in August, respectively.

Starter-home inventory is growing despite increased demand

Despite more starter homes being bought, inventory remains high. Active listings of starter homes grew by 16.4% year-over-year to the highest August level since 2016. However, when compared with mid- and high-priced homes, the typical starter home stays on the market for a similar length of time. The typical starter home sold in 41 days in August, a week slower than last year. Likewise, mid- and high-end homes stayed on the market for 40 and 41 days, respectively.

While the starter-home market has been performing well, it still poses affordability challenges for buyers

More Young Americans Are Abandoning the Starter Home Idea: As costs for starter homes climb, some young homebuyers are choosing to forego the starter home and save longer for their forever home instead.
Here’s How Much Is Needed to Afford a Starter Home: A recent survey found that an annual income of $80,000 is needed to afford the typical starter home. Despite this, the annual median income is just over $67,000.