• The number of U.S. cities where a typical starter home costs $1 million or more has hit a record 242, up from 226 a year ago.
  • California dominates with 105 such cities, while New York and New Jersey see the fastest growth.
  • Despite a slight national affordability improvement, entry-level homeownership remains out of reach for many.

Million-Dollar Threshold Becomes New Normal

The American dream of a starter home is increasingly a million-dollar proposition in a growing number of cities. According to a new Zillow analysis, 242 cities now have starter homes valued at $1 million or more, up from 226 last year and a stark reminder of lingering affordability strains.

Nationally, the typical starter home is priced around $198,649—a figure that, while up modestly, masks sharp regional disparities. California leads the pack with 105 cities crossing the million-dollar mark, followed by New York and New Jersey, which are experiencing the fastest increases. In total, 26 states now contain at least one such market.

The data, released in June, underscores how the pandemic-era housing boom has permanently reshaped entry-level pricing in many metros. “It’s a structural shift,” said a Zillow economist, noting that supply constraints and strong demand continue to push prices higher even as mortgage rates cool some markets. The New York City metro area alone accounts for dozens of these cities, while the San Francisco Bay Area remains a hotbed of high-priced starter homes.

Regional Hotspots and Growing List

The report highlights that the concentration of million-dollar starter homes is not limited to coastal elites. States like Colorado, Washington, and Massachusetts have also seen their counts rise. In New Jersey, towns like Hoboken and Jersey City now require over $1 million for a typical entry-level home, driven by proximity to Manhattan and limited new construction.

Efforts to address the affordability crisis have hit political snags. “Without a deal on zoning reform and new housing incentives, these numbers will keep climbing,” warned a housing policy analyst. Zillow’s data comes as the National Association of Realtors reports that first-time buyers now account for the smallest share of the market in decades.

Implications for Buyers and Investors

For prospective buyers, the landscape is daunting. Even in cities where prices have softened, competition for starter homes under $500,000 remains fierce. Investors, meanwhile, continue to eye high-cost markets for rental income, further tightening supply. “We’re seeing more institutional capital flowing into build-to-rent in these metros,” noted a real estate investment manager.

Zillow’s findings align with broader trends: while national price growth has moderated, the inventory of affordable homes remains at historic lows. Analysts expect the number of million-dollar starter-home cities to continue rising unless supply-side policies gain traction.

Correction: An earlier version of this article misstated the year-over-year increase. The correct figure is 242 cities, up from 226.