Skip to content

Zillow identifies best markets for first-time homebuyers

Local region, perhaps unsurprisingly, did not make the top 10

First-time home buyers in 2023 accounted for the largest share of home purchases in years, and new Zillow analysis names this year’s best markets for first-time home buyers, where their dollars go further and starter homes are relatively plentiful. 

No surprises here: The Washington region is not on the list.

First-time buyers made up half of all home buyers last year, according to Zillow’s Consumer Housing Trends Report. That’s the highest share in the report’s history, which dates back to 2018, and up from a low of 37 percent in 2021.

The “rate lock” effect – occurring when homeowners are financially incentivized to keep their current home because of the low rate on their current mortgage – has kept some would-be repeat buyers on the sidelines. 

“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,” said Zillow senior economist Orphe Divounguy. “Attractive homes are moving fast, so those looking to buy this spring should get their finances in order now, including getting pre-approved for a home loan.”

“The increase in new listings this spring, due both to new construction and to more homeowners choosing to sell, will give buyers more options and help to ease price growth,” Divounguy said. “The housing train is slowing down just enough to give more first-time buyers an opportunity to hop on board.”

What did Zillow determine where the top 10 markets for first-time buyers? Here you go:

1. St. Louis

2. Detroit

3. Minneapolis

4. Indianapolis

5. Austin

6. Pittsburgh

7. San Antonio

8. Birmingham

9. Kansas City

10. Baltimore

Zillow’s ranking of the best markets for first-time buyers is based on rent affordability, the share of for-sale listings a typical household can comfortably afford, how stiff the competition is expected to be for those affordable listings, and how many similar-age households live in the area. 

The top two markets in Zillow’s ranking, St. Louis and Detroit, score well in terms of affordability – both for rental affordability as a prospective buyer builds up savings for a down payment, and for the number of affordable homes available to buy.

Austin, while not the most affordable housing market on this list, ranks first in the number of similar-age households living there.