In this article, we will study the US housing market while taking a look at the 15 Cheapest States to Buy a House in the US. You can skip our detailed discussion of the housing market and see the 5 Cheapest States to Buy a House in the US.
The Persistent US Housing Affordability Crisis
With stubbornly low inventory and high mortgage rates, the US housing market has been a victim of severe unaffordability. Back in August last year, housing affordability was reported to be at its worst since 1984 when 38.6% of the median income was needed for the monthly payment on the average home purchase. While the concept of being housing cost-burdened means spending more than 30% of one’s income on housing costs, the number of cost-burdened homeowners in the country has grown by 2.3 million households between 2019 and 2021. During the same period, cost-burdened renters went up by 1.2 million thereby impacting homebuying since such renters face more difficulty in finally buying a house.
The median price of a previously owned US home increased for the eleventh consecutive month in May this year and rose to $419,300 which is the highest price reported by the National Association of Realtors. The supply not being able to cater to the growing demand poses the biggest threat to the market. Due to elevated mortgage rates, existing homeowners feel reluctant to pay a higher mortgage on a new home thereby restricting supply, a dilemma referred to as the mortgage lock-in effect.
The current picture of the US housing market might be slightly different but the root problems remain the same. The mortgage rates have dropped to their lowest in more than a year as the 30-year fixed-rate mortgage averaged 6.47%, its lowest since May 2023. While these rates were at a high 7.22% in early May, they have been steadily declining. While this decline is expected to boost the confidence of those who wish to buy a home, the opportunity for refinancing has become brighter for existing homeowners. However, potential homebuyers who might be motivated by the news are to witness the old issue of supply shortage as the inventory still remains below the pre-pandemic levels.
READ ALSO: 15 States with the Most Beautiful Houses in the US and 25 States with the Largest Homeless Populations in the US.
What Options Can Potential Homebuyers Seek?
A multitude of convenient housing options are available from America’s top homebuilders. One such reputable name in the industry is Lennar Corporation (NYSE:LEN). After a decade of under-building and customers not being able to seek an affordable housing inventory, the homebuilder strikes consumers’ pain points by providing affordable offerings to fill in this supply deficit while generating strong cash flow amid high interest rates.
Lennar Corporation (NYSE:LEN) has built over one million new homes in the US since 1954. The company grew from being a local Miami homebuilder to currently covering 26 states across the nation. Other than engaging in the profitable development of residential communities, the homebuilder offers conventional, FHA-insured, and VA-guaranteed residential mortgage loan products through its financial services subsidiary.
The company is in a strong market position after delivering strong operating results to date and currently benefitting from the volatile external conditions. Although the interest rates remained high during the second quarter, Lennar delivered a strong quarter. Increased sales incentives motivated customers who were challenged by the interest rates as evidenced by the 19% increase in new orders and a 15% increase in deliveries year-over-year. The firm remains on track to deliver 80,000 homes for the year after starting approximately 21,400 homes and selling approximately 21,300 homes during the quarter.
Over the past 5 years, the homebuilder has successfully expanded its top line by 16.75% and its bottom line by 10.66%. The status of a leading American homebuilder, the capability of building affordable housing in strategic markets that cater to the existing housing shortage, and a strong balance sheet are factors that make Lennar Corporation (NYSE:LEN) one of the highest quality homebuilders in America.
Now that we have taken a brief overview of the US housing market, let’s move to the 15 cheapest states to buy a house in the country.
15 Cheapest States to Buy a House in the US
Our Methodology:
In order to compile a list of the 15 cheapest states to buy a house in the US, we acquired data related to the two relevant housing metrics. Firstly, we shortlisted the 15 states with the lowest median home sale price. The most recent state-wise median sale price for homes was taken from Redfin. Furthermore, we supplemented our rankings with the median monthly housing costs by state, which were sourced from the US Census Bureau.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
15 Cheapest States to Buy a House in the US
15. Nebraska
Median Sale Price: $306,800
Median Monthly Housing Cost: $1,612
Nebraska is an attractive housing market for those who want to buy a home for a cheap price. Homes in the local market sell for a median price of $306,800 after rising by 3.9% year-over-year in June. Homeowners in the state need to pay a median monthly housing cost of $1,612.
14. Alabama
Median Sale Price: $293,400
Median Monthly Housing Cost: $1,343
Alabama boasts a median home sale price of $293,400 as of June. While this price is up 2.9% year-over-year, some of the Alabama metros with rapidly growing home prices include Florence, Millbrook, Oxford, and Gadsden. The state ranks among the most affordable states for home buyers in the country.
13. Kansas
Median Sale Price: $293,100
Median Monthly Housing Cost: $1,580
Kansas ranks 13th among the 15 cheapest states in the United States to buy a house. As of June, homes in the state sell for a median price of $293,100 which has recorded a rise of 4.4% since last year.
12. North Dakota
Median Sale Price: $285,000
Median Monthly Housing Cost: $1,653
With home prices climbing 2.4% year-over-year in June, the North Dakota median sale price is $285,000. As reported by the US Census Bureau, the median monthly housing expense in the state is $1,653.
11. Missouri
Median Sale Price: $282,100
Median Monthly Housing Cost: $1,436
As compared to last year’s June, home prices in Missouri are up 5.2%. Currently, the median sale price in the state is $282,100 which is cheaper than the majority of the US states. The median monthly housing expense in the state is $1,436. Missouri ranks 11th among the 15 cheapest states in the United States to buy a house.
10. Michigan
Median Sale Price: $273,300
Median Monthly Housing Cost: $1,472
Americans who wish to seek a cheaply priced home can resort to the state of Michigan. Homes in Michigan sell for a median price of $273,300 while the median monthly housing cost to be undertaken by homeowners is $1,472.
9. Kentucky
Median Sale Price: $273,000
Median Monthly Housing Cost: $1,344
According to Redfin, the median sale price in Kentucky is $273,000 as of June. This price was previously reported to be $258,300 in June 2023. Homeowners in the state need to incur a median monthly housing payment of $1,344.
8. Indiana
Median Sale Price: $271,900
Median Monthly Housing Cost: $1,301
Indiana offers a median home sale price of $271,900 which has increased by 5.9% since June 2023. Metros with the fastest-growing sales price in the state include Michigan City, Marion, Greenfield, and Gary.
7. Arkansas
Median Sale Price: $269,000
Median Monthly Housing Cost: $1,240
As of June, home prices in Arkansas have gone up by 6.9% since last year. However, the current Arkansas median sale price stands at $269,000 which makes the state one of the 15 cheapest states to buy a home in the US.
6. Louisiana
Median Sale Price: $264,900
Median Monthly Housing Cost: $1,481
With a median home sale price of $264,900 and a median monthly housing cost of $1,481, Louisiana ranks 6th on our list. Home prices in the state have experienced an increase of 2.2% year-over-year.
5. Mississippi
Median Sale Price: $263,500
Median Monthly Housing Cost: $1,311
Homes in the state of Mississippi sell for a median price of $263,500 which is lower than in many other states. The median monthly housing cost in Mississippi was recorded at $1,311.
4. Ohio
Median Sale Price: $263,000
Median Monthly Housing Cost: $1,429
Ohio is another state where it is relatively affordable to own one’s own place. The state offers a median sale price of $263,000 which is lower than the national average. As recorded in June, the state’s home prices have climbed 5.7% year-over-year.
3. Oklahoma
Median Sale Price: $257,200
Median Monthly Housing Cost: $1,416
As of June, the median home sale price in Oklahoma is $257,200. The state has a median monthly housing expense of $1,416 to be incurred by those who wish to settle in. Thus, Oklahoma ranks 3rd on our list of the cheapest states to buy a house.
2. West Virginia
Median Sale Price: $251,900
Median Monthly Housing Cost: $1,180
West Virginia comes second among the states where buying a home is cheap. The state boasts a median sale price of $251,900. This price has experienced a rise of 2.9% since 2023. Metros with the fastest growing sales price include Fairmont, Charleston, Martinsburg, and Wheeling.
1. Iowa
Median Sale Price: $248,100
Median Monthly Housing Cost: $1,444
Iowa ranks at the top of the 15 cheapest states to buy a home in the US. As of June, the median sale price in the state is only $248,100 while the median monthly housing cost stands at $1,444. Although home prices have gone up by 3.9% compared to last year, they are still relatively low. The median days on the market are 27 days.
At Insider Monkey, we delve into a variety of topics; however, our expertise lies in identifying the top-performing stocks. Currently, Artificial Intelligence (AI) technology stands out as one of the most promising fields. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article was originally published at Insider Monkey.
