Best U.S. Cities for First-Time Homebuyers in 2025 — Affordable Homes & Low Competition
Struggling with high home prices and mortgage rates? Check out the best U.S. cities offering affordable homes and plenty of options for first-time buyers in 2025!
Mortgage rates have climbed sharply over the past few years and currently sit near 7%, a level not seen since before the pandemic. At the same time, the median price for a home in early 2025 topped $400,000, according to data from the Federal Reserve Bank of St. Louis. For many first-time homebuyers, this means monthly payments are higher, and finding an affordable home is becoming more challenging.
This rise from record-low mortgage rates of 2.65% in early 2021 to today’s rates has been influenced by several factors — including recent economic events like Moody’s downgrade of the U.S. credit rating, which briefly pushed interest rates even higher. Higher mortgage rates increase borrowing costs, meaning buyers get less house for the same monthly payment compared to just a few years ago.
Since buyers can’t control national mortgage rates or home prices, one of the smartest strategies is to focus on where they buy. Some cities and towns have more stable prices and a larger number of homes available for sale, helping first-time buyers avoid bidding wars and overpaying. Identifying these markets can stretch a buyer’s dollar further and improve their chances of securing a home without compromising their budget.
McAllen, Texas Tops the List for First-Time Buyers
SmartAsset recently analyzed 180 U.S. cities to identify the best spots for first-time buyers, weighing factors like affordability, housing availability, demand, and expected price shifts over the next year.
McAllen, Texas, at the southern tip of the state near the border, earned the No. 1 spot overall. One of its biggest draws is price stability — home prices there are predicted to increase by just 0.4% in the coming year, providing buyers with less market uncertainty.
The median home price in McAllen is about $204,499, which is roughly four times the median local income, making it easier for buyers to afford homes without overstretching financially.
Most Affordable Cities for First-Time Buyers
When focusing purely on affordability — how home prices compare to local incomes — Midwestern cities dominate. Illinois’ Peoria and Decatur rank among the best for affordability, with other budget-friendly cities including Cedar Rapids and Davenport in Iowa, Muncie in Indiana, Springfield in Illinois, and St. Joseph in Missouri.
However, only Lawton, Oklahoma, with a median home price of $150,007, breaks into SmartAsset’s top 10 for first-time buyers overall, showing that affordability alone isn’t the only factor at play.
| Position | Metropolitan Area | Typical Median Home Price (USD) |
| 1 | Harrisburg, Pennsylvania | Around $195,000 |
| 2 | Rochester, New York | Approximately $160,000 |
| 3 | Villas, Florida | Near $185,000 |
| 4 | Lauderdale Lakes, Florida | Roughly $170,000 |
| 5 | Pine Bluff, Arkansas | Close to $120,000 |
| 6 | Buffalo, New York | About $140,000 |
| 7 | Springfield, Missouri | Estimated $150,000 |
| 8 | Jackson, Mississippi | Around $130,000 |
| 9 | Toledo, Ohio | Approximately $125,000 |
| 10 | Akron, Ohio | Near $110,000 |
| 11 | Dayton, Ohio | Roughly $115,000 |
| 12 | Chattanooga, Tennessee | Close to $160,000 |
| 13 | Youngstown, Ohio | About $90,000 |
| 14 | Erie, Pennsylvania | Estimated $105,000 |
| 15 | Flint, Michigan | Around $85,000 |
| 16 | Syracuse, New York | Approximately $100,000 |
| 17 | Rockford, Illinois | Near $115,000 |
| 18 | Scranton, Pennsylvania | Roughly $120,000 |
| 19 | Macon, Georgia | Close to $130,000 |
| 20 | Birmingham, Alabama | Close to $130,000 |
Best Cities for Greater Home Inventory
One major hurdle in the housing market is the shortage of available homes. Even though inventory is slowly improving in some areas, many places still face tight supply, driving up competition and prices.
For buyers prioritizing more options, several southern cities stand out. Cape Coral and Port St. Lucie, both in Florida, offer the most homes for sale per capita, making these cities attractive for those wanting a wider selection.
What First-Time Buyers Should Consider
Choosing the right city can mean the difference between finding a manageable mortgage and stretching finances too thin. While places like McAllen offer price stability and affordability, buyers should also consider inventory levels and market trends.
As mortgage rates and prices remain high nationally, targeting cities with steady prices and abundant housing options could help first-time buyers find their footing in the market without overpaying or facing fierce competition.
Also Read: 10 Affordable U.S. Cities That Could Surpass $1M in Home Prices by 2033
