First-time homebuyers face shrinking inventory and rising prices

The US housing market is facing significant challenges for first-time buyers as starter home inventory declines and prices rise. Data from Realtor.com indicates that the national share of starter homes—properties listed at 80% or less of the median metropolitan price—fell from 38.1% in August 2019 to 36.2% in 2026. During this same period, the average price for these homes increased by 30.8%, rising from approximately $260,000 to $340,000.

In response to these economic pressures, first-time buyers are becoming more aggressive in negotiations. A survey of 934 prospective and recent buyers by Neighbors Bank found that 86% are comfortable making offers below the list price, and 40% identified price reductions as the most persuasive concession for proceeding with a purchase. Despite this increased willingness to bargain, affordability remains a major concern; only 21% of respondents viewed the current market as a good time to buy.