Record 242 U.S. Cities Now Have $1 Million Starter Homes, Showing the Affordability Crunch Has Reached First-Time Buyers

Many would-be buyers waited out the pandemic surge. They saved for longer, rented for longer, put off buying, and watched the typical age of a first-time homebuyer rise to a record 40. Now, those who followed the usual advice are facing a new obstacle: the Northeast has become the fastest-growing region for million-dollar starter homes in the country.

The timing is particularly bad for millennials who are moving into their highest household spending years and trying to start families, or at least attempting to.

A Zillow report released in June says there are now a record 242 U.S. cities where starter homes cost $1 million or more. That is nearly triple the 80 cities that crossed that threshold before the pandemic, and higher than the 226 cities counted a year earlier.

The share of first-time buyers has dropped to about half the historical average. For millennial parents in the Northeast—now mostly in their late 30s and early 40s and often seeking more space—the figures take on a sharper meaning.

New Jersey had only one city with million-dollar starter homes before the pandemic; now it has 26. New York went from 12 to 41. Together, the two states added 15 cities to the list in the past year alone, the fastest increase anywhere in the country. The New York City metro area now leads all metros with 63 cities where a starter home costs at least $1 million.

That expansion did not happen in isolation. Zillow’s 2026 analysis shows six of the 10 most competitive housing markets in the country are in the Northeast, a region where new construction has long lagged and supply shortages run deepest. California still has the largest total number, with 105 cities, but the Northeast is where the problem is spreading most quickly.

Zillow senior economist Kara Ng said a housing shortage years in the making collided with strong demand and mortgage rates at historic lows, sending home values higher at a record pace. In the Northeast, those pressures have combined especially sharply.

The typical first-time homebuyer is now 40

First-time buyers are usually younger, but the median age for this group has climbed to an all-time high of 40, according to a National Association of Realtors report released in November 2025. In addition, the number of first-time buyers fell to half the historical norm last July, reflecting just how unaffordable the market has become.

As starter homes become more expensive, the first purchase moves even further out of reach. The problem has worsened notably over the past couple of years.

“For homebuyers, the prevalence of million-dollar cities significantly—greatly—strains what is already the worst housing affordability since at least the 1980s,” Christopher M. Naghibi, executive vice president and chief operating officer at First Foundation Bank, told Fortune in 2024 when Zillow released a report on U.S. cities with $1 million median-priced homes. “Prospective buyers in these markets face higher barriers to entry, needing ridiculously large down payments and higher incomes to afford homes.” That remains true.

Zillow defines a starter home as one in the lowest third of home values in a given region. As of June, the typical starter home nationwide was worth $198,649, up 1.7% from a year earlier. Yet in more than 200 U.S. cities, starter homes cost about five times that amount. The trend continues to spread into places that were once untouched by it.

Zillow says the pandemic-era housing boom helped drive the shift.

The issue is no longer limited to California

Before 2020, almost all cities on the million-dollar starter-home list were on the coasts. Colorado was the only non-coastal state represented. Now 26 states have at least one such city, up from nine before the pandemic. Texas, Wyoming and Illinois each have multiple examples.

California still has the highest count at 105 cities, but the fastest growth is in the Northeast. New York and New Jersey together added 15 cities over the past year. New York now has 41, up from 12 before the pandemic. New Jersey has 26, up from just one.

The New York City metro area leads all metros with 63 cities where a starter home costs at least $1 million. San Francisco follows with 37, Los Angeles has 33, San Jose has 13, and Miami and Seattle each have eight. The pattern matches Zillow’s 2026 hottest markets analysis, which found six of the 10 most competitive housing markets are in the Northeast, where construction has lagged and inventory shortages remain severe.

The pandemic changed the price of homebuying. A shortage that had been building for years ran into surging demand and historically low mortgage rates, driving home values upward at a record speed. Those effects have persisted.

Baby boomers are pushing younger buyers aside

The pressure on millennials and Gen Z has been building for years. Baby boomers, many of whom are sitting on paid-off homes or low-rate mortgages locked in during the pandemic, have crowded younger buyers out in record numbers. The result has led some Americans to postpone marriage and children, while others have turned to co-buying with friends or partners to share the cost.

Others have done the reverse: they have had children first, rented longer, and are now searching for space in a market that moved against them.

“We’re seeing a reshaping of the housing ladder,” Alexandra Gupta, a real-estate broker with the Corcoran Group, previously told Fortune. “Some first-time buyers are turning to long-term renting or even co-living models because the idea of owning a home has become so out of reach.”

There are some small signs of improvement. Market conditions are slowly becoming more favorable for buyers. Zillow found the typical buyer now breaks even compared with renting after about six years, down from more than eight in late 2023. More available homes and slower price growth mean financially prepared buyers are in a better position than they were before.

Still, being financially prepared carries a heavy burden in 242 cities with $1 million starter homes. For younger buyers in those places, the costs add up quickly: a larger down payment, a higher monthly mortgage, and a much harder climb toward the American Dream.

No wonder that dream is playing out mostly in Texas.