BAM Key Details: 

  • Zillow revealed the top 10 markets for first-time home buyers, based on housing and rental affordability, competition levels, and similar aged households.
  • The Midwest holds five of the top ten spots, with St. Louis ranked first.

First-time buyers accounted for half of all home purchases last year, the highest proportion since Zillow began tracking in 2018. 

The increase of first-time buyers from a low of 37% in 2021 underscores theire resilience and determination to find a place they can call their own. Millennial and Gen Z buyers, in particular, are willing to find creative solutions to secure cash needed for down payments.  

So, which markets are best for first-time buyers? Keep reading to learn what the Zillow analysis found.  

Midwest Leads the Way for First-Time Buyers

St. Louis emerges as the top market for first-time home buyers, with 67% of total for-sale inventory being affordable. That percentage of affordable inventory is one reason the Midwest dominates the list with half of the markets located there. 

In addition to affordable housing inventory, Zillow considered various factors when creating its top ten list. These include rental affordability, expected competition levels, and the share of households ages 29–43.

Top 10 Markets for First-Time Home Buyers

  1. St. Louis—67% of the total for-sale inventory considered affordable
  2. Detroit—64%
  3. Minneapolis—48%
  4. Indianapolis—50%
  5. Austin—23%
  6. Pittsburgh—63%
  7. San Antonio—33%
  8. Birmingham—47%
  9. Kansas City—51%
  10. Baltimore—56%

Overcoming the “Lock-In” Effect

The lock-in effect, a phenomenon deterring potential repeat buyers due to favorable existing mortgage rates, has contributed to the shortage of available homes, making it challenging for first-time buyers to enter the market over the past few years. 

The good news is, this is starting to shift—in some markets more than others.

“Affording a home is a tough hill to climb, and it’s especially steep for those buying their first home. Headwinds like mortgage rates, low inventory and rising rents are still strong, but easing.”

Orphe Divounguy

Senior Economist , Zillow

A rise in new listings in some markets, fueled by both new construction and existing homeowners opting to sell, signals a shifting tide. Zillow’s Senior Economist, Orphe Divounguy, advises prospective buyers to prepare their finances, including securing pre-approval for home loans, to take advantage of the increasing options and moderating price growth.

While affordability remains a challenge, “The housing train is slowing down just enough to give more first-time buyers an opportunity to hop on board,” Divounguy said.