They waited out the pandemic boom, saved longer, rented longer, and delayed longer—all while the typical first-time homebuyer age climbed to a record 40. Now, the buyers who did everything right are running into a new problem: the Northeast has become the fastest-growing region in the country for million-dollar starter homes.

The timing is especially awkward for millennials entering their peak household-spending years and beginning to form families of their own. A Zillow report published in June counts a record 242 U.S. cities where a starter home costs $1 million or more—triple the 80 cities that cleared that mark before the pandemic, and up from 226 a year earlier.

At the same time, the share of first-time buyers has fallen to half the historical norm. For millennial parents in the Northeast—many now in their late thirties or early forties, often with children and searching for more space—the numbers have a specific shape.

New Jersey had just one million-dollar starter city before the pandemic; it now has 26. New York had 12; it now has 41. Together, the two states added 15 cities to the list in the past year alone—faster growth than anywhere else in the country. The New York City metro area now leads all metros with 63 cities where a starter home runs $1 million or more.

That growth did not happen in a vacuum. Six of the 10 most competitive housing markets in the country are in the Northeast, according to Zillow's 2026 analysis—a region where new construction has chronically lagged and inventory deficits run deepest. California still leads the raw count with 105 cities, but the Northeast is where the crisis is actively spreading.

"A housing shortage a decade in the making ran headlong into intense demand with mortgage rates at historic lows, driving up home values at a record pace," Zillow senior economist Kara Ng wrote. For buyers in the Northeast, those forces have compounded.

The typical first-time homebuyer is now 40

First-time buyers have historically been younger, but the typical age of a first-time buyer climbed to an all-time high of 40, according to a National Association of Realtors report released in November 2025. The market has become so unaffordable that the number of first-time homebuyers fell to half the historical norm last July.

A rising price floor on starter homes only pushes that first purchase further out of reach—a problem that has worsened considerably 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 the number of 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 assessment still holds today. 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. In well over 200 U.S. cities, starter-home prices run roughly five times that level. The phenomenon keeps spreading—into places it never used to touch—and Zillow attributes it largely to the effects of the pandemic housing boom.

It is not just a California problem anymore

Before 2020, the list of cities with $1 million starter homes was almost entirely coastal; Colorado was the only non-coastal state with one. Now 26 states have at least one, up from nine before the pandemic. Texas, Wyoming, and Illinois each have multiple examples.

California still leads with 105 cities, but the fastest growth is in the Northeast. New York and New Jersey added 15 cities combined over the past year, with New York rising to 41 from just 12 before the pandemic and New Jersey climbing to 26 from one.

After the New York City metro area's leading count of 63, San Francisco follows with 37, Los Angeles with 33, San Jose with 13, and Miami and Seattle with eight each. The pattern aligns with Zillow's 2026 hottest markets analysis, which found six of the 10 most competitive housing markets in the Northeast, where new construction has lagged and inventory deficits run deep.

The pandemic reset the cost of buying a home: a housing shortage a decade in the making collided with surging demand and historically low mortgage rates, pushing values up at a record pace. Those effects have stuck.

Baby boomers edge younger buyers out of the housing market

The squeeze on millennials and Gen Z has been building for years. Baby boomers, sitting on paid-off homes or cheap pandemic-era mortgages, have edged younger buyers out of the market in record numbers. The cost has pushed some Americans to delay milestones like marriage and children, and others to co-buy homes with friends or partners just to split the bill. Still others have done the opposite—had children first, rented longer, and are now hunting 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."

Modest signs of relief

Conditions are slowly turning friendlier for buyers. Zillow found that the typical buyer now breaks even versus renting after about six years, down from more than eight in late 2023. With more inventory and slower price growth, buyers who are financially prepared are in better shape than they had been.

But "financially prepared" carries a lot of weight in the 242 cities with $1 million starter homes. For a young buyer there, the costs pile up fast: a bigger down payment, a higher monthly mortgage, and a steeper climb toward the American Dream. For scale, a 20% down payment on a $1 million home comes to $200,000—more than the typical starter home is worth nationwide. No wonder that dream is largely happening in Texas.

Whether the map of million-dollar starter cities keeps expanding—especially across the Northeast, where inventory deficits run deepest—will be one measure to watch when Zillow updates the count next.

A version of this story was published on Fortune.com on June 17, 2026.

Source: Fortune