The monthly housing payment for the typical starter home that sold in July was $1,981, up 4.4% from one year earlier, according to a new data report from Redfin (NASDAQ: RDFN). To afford a typical starter home, buyers must earn $79,252 annually, also up 4.4% year-over-year and only a few hundred dollars below last October’s all-time high.
But the typical household earns an estimated $83,966 per year, which is slightly above the level needed to afford a starter home. Redfin pointed out that a household earning 80% or less of the median income – $67,173 or less – cannot afford the typical starter home.
The typical starter home sold for a record $250,000 in July, up 4.2% year-over-year, while last month’s average mortgage rate of 6.85% was more than double pandemic-era lows. Roughly 70% of starter homes are affordable to the median-earning household, down from about 73% a year ago and near the record low, Redfin added, noting that a family earning the local median income cannot afford to buy a starter home in half of the 50 most populous metros.
On the plus side, listings of starter homes were up nearly 20% year-over-year nationwide in July, a greater increase than the 4.1% increase for mid-priced homes.
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