Zillow’s latest analysis reveals that 242 U.S. cities now have “starter homes” priced at $1 million or more, a sharp increase from pre-pandemic levels. This surge reflects escalating home prices across the country, particularly in California and the Northeast, as ongoing housing shortages combine with strong demand and low mortgage rates.
What Happened
On June 15, 2026, Zillow announced that the number of metropolitan areas where the lowest third of home values—defined as starter homes—exceed $1 million has tripled since 2020. This trend represents a significant shift from just nine states having cities with million-dollar starter homes before the pandemic to 26 states now.
Key Facts
- There are 242 U.S. cities with starter homes costing at least $1 million, according to Zillow.
- California leads with 105 cities having million-dollar starter homes.
- New York has 41 such cities; New Jersey 26; Florida 11; Massachusetts 10; Washington 8; Texas 7.
- Zillow defines starter homes as those in the lowest third of home values in a region.
- The typical starter home nationally still costs just under $199,000, with the overall median home price at nearly $418,000 (National Association of Realtors).
- Households need an annual income of about $117,000 to afford the median-priced home, with average earners expected to allocate 40% of their income toward the mortgage (Redfin data).
Why It Matters
This widespread rise in starter home prices signals increasing challenges for first-time homebuyers, burdening many with housing costs that exceed recommended affordability thresholds. The expansion of million-dollar starter homes beyond coastal hot spots highlights systemic supply constraints contributing to nationwide affordability issues.
Background
Home prices surged during the COVID-19 pandemic because of a combination of limited housing inventory, strong buyer demand, and historically low mortgage rates. Prior to the pandemic, million-dollar starter homes were largely limited to a handful of coastal cities; now, higher prices have extended to over two dozen states.
Analysis
Kara Ng, senior economist at Zillow, explained that the pandemic “reset the cost of buying a home,” pushing seven-figure starter homes from coastal states into many more U.S. regions. Ng noted that Sun Belt cities have seen new housing supply ease price growth, whereas cities in the Northeast remain strained by unresolved shortages.
Who Is Affected
Prospective first-time homebuyers nationwide, particularly in California and Northeast metropolitan areas, face heightened affordability barriers. Households earning average incomes must consider dedicating significantly larger portions of earnings toward housing costs.
What Remains Unclear
- Specific market trajectory for home prices outside the current trend was not detailed.
- No projections on when or if housing supply issues in the Northeast will resolve.
- Data on potential impacts of interest rate changes on affordability was not confirmed.
What Comes Next
This information was not confirmed in the reviewed sources.
Sources
This article is based on reporting and publicly available information from the following source:
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