NEW YORK, NY — First-time buyers are getting a little more breathing room in the housing market, according to new Zillow data. Starter homes are staying listed longer, price cuts are becoming more common, and buyers are facing less pressure from the kind of bidding wars that defined the pandemic era.
The shift does not mean buying has become easy. Mortgage rates remain elevated, household budgets are still tight, and many would-be buyers are short on savings for a down payment. Even so, Zillow says entry-level homes are no longer moving with the same speed or intensity they did a few years ago, giving shoppers more time to compare options and negotiate.
What Zillow Found
Zillow defines a starter home as one that falls between the 5th and 35th percentile of home values in a local market. By that measure, the typical starter home nationwide is worth about $202,000, up 2.3% from a year earlier.
The company also said nationwide inventory of starter homes rose 4.5% from a year ago. In some markets, the increase was much larger, including Memphis at 52%, Buffalo at 33%, Louisville at 32%, Pittsburgh at 26.3% and Oklahoma City at 19%. Zillow said about one in four starter-home listings had a price cut in June, compared with 20.6% of luxury listings.
Why The Market Shifted
Real estate agents and economists quoted by Zillow said the market is more balanced than it was in 2021 and 2022, when buyers often waived inspections, shortened deadlines and stretched to beat competing offers. Chris Wands, a South Florida agent with Douglas Elliman, said buyers now have more room to ask for seller credits, closing-cost help, rate buydowns, repairs after inspections and even furnishings or appliances.
Zillow senior economist Kara Ng said the best time to buy is often when other buyers are not crowding the market. The contrast with luxury housing is sharp: Zillow said luxury sales rose 6.2% in May from a year earlier, while starter-home sales fell 5.4%. In San Francisco, luxury sales jumped 21.6% even as starter-home sales slipped 1.2%.
What Buyers Can Watch
Bankrate put the average rate on a 30-year fixed mortgage at 6.79% at the start of August 2026, a level that continues to make affordability a challenge for many households. Kristina Quesada, a realtor with The Yost Quesada Team in San Diego, said buyers should not assume waiting for a lower rate will automatically improve the deal if competition and prices rise again.
Aaron Bae, a mortgage and real estate broker in Los Angeles, said more buyers usually return when rates fall, which can quickly revive competition. For readers comparing options, Zillow’s local market data and Bankrate’s rate tracking are both available online. The broad trend is clear: starter-home shoppers now have more inventory, more price reductions and more negotiating leverage than they did during the hottest years of the pandemic market.
More on what homes, rents and new builds are doing near you, on RHS Commoner.
