Revealed: The income needed to afford a starter home in each US state
Many young Americans dream of buying their first home, but the income they need to afford a property is only on the up.
Despite decreasing slightly last fall, mortgage rates have hit 7 percent again.
This means the average household income needed to afford a typical starter home in the US has soared to $70,164 - more than double the $32,357 figure needed in 2019.
That is according to new analysis from Realtor.com.
The data lays bare how despite incomes rising in recent years, salaries are not keeping up with the spiraling cost of homeownership.
Starter home prices across the US have surged in the past five years, hitting an average of $292,950 in 2024.
But the income needed to afford a typical starter home varies significantly between states, where property prices vary hugely.
Affording a starter home in West Virginia requires the lowest household income, while buying the equivalent home in Hawaii would be the toughest for a first-time buyer.
The new analysis defines starter homes as ones in the bottom quarter of available list prices in an area.
The estimated income needed assumes a 7 percent mortgage rate and a 10 percent down payment, and does not include tax and insurance.
In West Virginia, residents need a household income of just $31,653 to afford a starter home, according to Realtor.com.
This is compared to a huge $167,199 in the most expensive state of Hawaii.
The state with the second highest income needed for a first-time buyer is the District of Columbia, where Americans need $139,813.
In Illinois - the second cheapest state - residents need $38,369 to be able to afford a starter home.
Monthly home payments on starter homes nationwide have risen 116 percent from 2019 to $1,754 at 2024 prices with a 7 percent mortgage rate.
To be considered affordable, home payments typically should eat up no more than 30 percent of household income.
Monthly payments have risen the most in New Hampshire of any state, according to Realtor.com, up 164 percent since 2019.
The typical monthly mortgage payment for a starter home in New Hampshire is now $2,600, assuming a 10 percent down payment, which would require an income of $103,985 to be considered affordable.
Residents need an average income of $167,199 to afford a starter home in the most expensive state of Hawaii
In West Virginia , residents need a household income of just $31,653 to afford a starter home, according to Realtor.com
Monthly payments have risen the slowest in Louisiana, but even there they are up 77 percent from five years prior.
Starter homes now require an income of $46,752 to be considered affordable, which is up from $26,468 in 2019.
Affordability challenges have pushed many first-time buyers to the sidelines.
Last year, the share of all successful homebuyers who were first-timers dropped to 24 percent - the lowest on record.
Americans purchasing a home for the first time are often earlier in their careers, with lower income and less savings, and face the additional hurdle of entering the market without any prior home equity to lean on.
'Though home price growth has contributed significantly to declining affordability, mortgage rate growth has exacerbated the issue,' said Realtor.com senior economic research analyst Hannah Jones.
'While starter home prices climbed 53.7 percent over the last five years, payments more than doubled due to mortgage rates increasing from roughly 4 percent to almost 7 percent.
'Falling mortgage rates are crucial to improved housing affordability,' she added.
The average 30-year fixed-rate mortgage was 7.04 percent according to latest data from Freddie Mac on January 16.
