Buying a first home has become an impossible dream for millions of Americans as soaring prices continue to outpace earnings. But there are still a handful of states where starting out on the property ladder remains within reach. A new analysis by LendingTree found that starter homes are now unaffordable for nearly two-thirds of would-be buyers across the country, with just 37.6 percent of non-homeowners able to afford an entry-level property in their own state. But the market looks dramatically different across parts of the Sunbelt, where lower home prices mean first-time buyers still have a realistic chance of finding a home. Mississippi, Arkansas and Alabama all rank among the nation's most affordable states for starter homes, while neighboring West Virginia also made the top four. Mississippi topped the rankings, with 61.8 percent of non-homeowners able to afford a starter home. West Virginia followed at 58 percent, with Arkansas at 54.3 percent and Alabama at 54.1 percent. In Mississippi, the average starter home costs just $85,000, while buyers in West Virginia pay an average price of around $90,000 - less than half the national average of $200,000.

The findings highlight the growing divide between affordable housing markets in the South and some of America's most expensive coastal states. Nationwide, LendingTree found the typical non-homeowner household earns $7,099 less each year than the income needed to comfortably purchase the average starter home. That affordability gap has widened as home prices have surged far faster than wages in recent years. 'It's safe to say that most people don't get raises of $7,099 each year,' said Matt Schulz, LendingTree's chief consumer finance analyst. 'That means that bridging that gap might require a side hustle, a second job or other sacrifices. That's tough, however, especially with how many other demands people already have on their time.'

Schulz said the affordability crisis is preventing many Americans from building wealth through homeownership. 'Homeownership can be a powerful wealth-building tool and a real stabilizing force for families,' he said. 'However, the numbers involved are so daunting that many people don't see a realistic way to get into the market.' While affordability remains relatively strong across parts of the South, the outlook is far bleaker elsewhere. Rhode Island ranked as the least affordable state overall, with only 16.5 percent of non-homeowners able to afford a starter home. The average starter home there costs around $350,000, leaving households earning $56,581 less than the income required to buy one.

Jon Perroni, 30, grew up in Bristol, Rhode Island, but moved to New York several years ago to pursue a career in human resources. He told the Daily Mail the latest housing data comes as no surprise after watching prices climb throughout his twenties and seeing an influx of out-of-state buyers - including celebrities such as Taylor Swift, who purchased an $18 million mansion in Westerly back in 2013. 'Having grown up in Rhode Island, I know a lot of people who have struggled with the current housing market,' Perroni said. 'From my perspective, it seems like the previous generation was able to purchase homes at the age my generation is now.'

Although Perroni still has family in the state, he does not view it as a realistic place to settle down. He noted that salaries in Rhode Island tend to lag behind those in New York. 'This situation has led many young individuals like me to turn their attention to housing markets outside of Rhode Island,' he said. The LendingTree analysis revealed that California recorded the nation's biggest affordability gap in dollar terms. The average starter home in the Golden State now costs approximately $482,000 - nearly $300,000 above the national average - and typical non-homeowner households earn $67,776 less than the income needed to afford one.

Only around one in five Californians who do not already own a home can realistically purchase a starter property. The affordability squeeze reflects years of rapid house price growth that has dramatically outpaced income increases. According to Realtor.com, starter home prices have risen by nearly 35 percent nationally since 2019, while the smallest homes have seen even sharper increases. Single-family homes with two or fewer bedrooms have jumped more than 77 percent over that period. The supply of affordable homes has also shrunk significantly. In 2019, homes priced below $300,000 accounted for 62 percent of all home sales, according to Redfin. Today they make up just 39 percent. Properties priced under $200,000 have become even scarcer, falling from 40 percent of sales to just 21 percent. 'The starter home hasn't disappeared entirely, but it has become far less accessible,' Redfin chief economist Daryl Fairweather previously said. Among generations, millennials remain the group most likely to be able to afford a starter home, with 45.2 percent able to purchase one. That compares with 40.7 percent of Generation X non-homeowners, 37.3 percent of Generation Z and just 24.3 percent of baby boomers. For many aspiring buyers, however, where they live may now matter just as much as how much they earn.