The typical starter home sold for a record $260,508 in August, a 2.2% year-over-year increase, according to new data from Redfin. In comparison, mid- and high-price home prices grew 1.4% and 2.7% over the same period, respectively, to near-record highs of $370,000 and $575,000.
August’s price data marked the 12th consecutive month for starter home price increases, outpacing other price tiers
Sales of starter homes increased 3.8% year-over-year, rising for the 12th consecutive month to the highest August level in three years. In comparison, sales of mid-price homes fell 0.6% while high-price homes fell 1.2%. Sales of mid- and high-price homes have been in year-over-year declines for each month since February.
Pending sales of starter homes were also on the rise with a 3.1% year-over-year in August. In comparison, pending sales of mid- and high-price homes fell 0.1% and 0.8% year-over-year, respectively.
Active listings of starter homes are up 16.4% year-over-year to the highest August level since 2016. In comparison, active listings of mid- and high-price homes grew 13.4% and 12.5% from one year earlier, respectively. However, inventory growth is slowing, with new listings of starter homes up by a slight 0.3% year-over-year while new listings of mid- and high-price homes both fell 0.8% from the prior year.
“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,” said Redfin Senior Economist Sheharyar Bokhari. “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. For many households, stretching into the mid-tier isn’t feasible with high prices and elevated mortgage rates.”
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