Where are the cheapest states to buy a house?

1 min read by Unbiased team Last updated June 28, 2024

Investigate the dynamics of housing costs and uncover which states provide the cheapest options for homebuyers.

Summary 

  • Housing affordability varies widely across the US and is influenced by economic conditions, supply and demand, and income levels. 

  • Buying in low-cost states may include facing challenges like lower investment returns, economic instability, and fewer amenities. 

  • West Virginia, Mississippi, Arkansas, and Oklahoma are some of the cheapest states in which to purchase a house.  

How affordable is housing in the US? 

The real estate market in the United States has always been a hot topic, especially when it comes to affordability. With housing prices soaring in many urban centers, finding the cheapest place to buy a house can be a challenge.  

However, the picture is different everywhere. Some states offer significantly lower housing costs than others, providing a haven for homebuyers looking for budget-friendly options. If you’ve ever wondered what state is the cheapest to buy a house, you’re not alone. 

The cheapest place to buy a house in the United States varies widely due to a range of factors.  

States like California and New York are notorious for their high property prices, driven by demand, economic opportunities, and a concentration of amenities.  

Conversely, states with the cheapest real estate, such as West Virginia and Mississippi, boast some of the lowest housing costs because of economic conditions, lower demand, and often a slower pace of life. 

What are the factors that influence housing affordability? 

Understanding why states with the cheapest real estate are able to have lower prices than others requires a look at several key factors: 

  • Economic conditions: States with booming economies, high employment rates, and large metropolitan areas typically have higher housing prices. Conversely, states with less economic activity often have more affordable real estate. 

  • Supply and demand: High demand in urban areas with limited housing supply drives up prices. In contrast, rural areas or states with abundant land and housing stock see lower prices. 

  • Average income levels: Housing affordability often correlates with local income levels. Housing prices tend to be more affordable in states where the average income is lower, reflecting the economic realities of the residents. 

  • Property taxes and insurance costs: High property taxes and insurance costs can significantly impact overall housing affordability. States with lower taxes and insurance costs provide more financially manageable options for homeowners. 

  • Living expenses: General living expenses, including utilities, transportation, and healthcare, also influence where people can afford to buy homes. States with lower living costs often offer more affordable housing markets. 

Top 10 cheapest states to buy a house 

According to Rocket Mortgage, these are 10 of the cheapest states to buy a house.  

For each state, we will examine why it ranks as one of the cheapest, including average home prices, population, lifestyle, employment opportunities, and the pros and cons of buying a home there. 

West Virginia 

West Virginia is one of the cheapest states to buy a house due to its lower demand and economic conditions.  

  • Average home price: $143,200. 

  • Population: 1.8 million. 

  • Lifestyle: Offers a serene lifestyle with a slower pace of life, appealing to those looking to escape the city. 

  • Employment opportunities: Mining, forestry, and tourism. 

  • Pros: Beautiful scenery and low cost of living. 

  • Cons: Limited job opportunities and slower economic growth. 

Mississippi 

Mississippi's affordable housing market is influenced by its agricultural economy and lower income levels. 

  • Average home price: $145,600. 

  • Population: 2.9 million. 

  • Lifestyle: Known for its rich history, southern hospitality, and a strong sense of community.  

  • Employment opportunities: Agriculture, manufacturing, and trade. 

  • Pros: Rich cultural history and mild winters. 

  • Cons: High poverty rates and less economic diversity. 

Arkansas 

Arkansas’s affordable housing market reflects its diverse economy and lower demand. 

  • Average home price: $162,300. 

  • Population: 3 million. 

  • Lifestyle: Offers a mix of urban and rural living, with vibrant cities like Little Rock and expansive natural parks. 

  • Employment opportunities: Agriculture, aerospace, and retail. 

  • Pros: Diverse natural landscapes and a low cost of living. 

  • Cons: Higher crime rates in some areas and limited public transportation. 

Louisiana 

Louisiana’s housing remains affordable due to economic factors and natural disaster risks impacting property values. 

  • Average home price: $192,800. 

  • Population: 4.6 million. 

  • Lifestyle: Known for its vibrant culture, music, and cuisine, Louisiana is a cultural melting pot with a strong community vibe. 

  • Employment opportunities: Energy, petrochemical, and tourism. 

  • Pros: Rich cultural life and a strong community feel. 

  • Cons: Vulnerable to hurricanes and higher crime rates in urban areas. 

Indiana 

Indiana’s affordable housing market comes from balanced economic conditions and lower living costs. 

  • Average home price: $182,400. 

  • Population: 6.7 million. 

  • Lifestyle: It offers a blend of bustling cities and quiet, rural areas, and it is known for its sports culture and friendly communities. 

  • Employment opportunities: Manufacturing, agriculture, and healthcare. 

  • Pros: Strong job market and excellent educational institutions. 

  • Cons: Variable weather, including harsh winters and limited public transportation in rural areas. 

Delaware 

Despite Delaware’s higher property prices than other affordable states, its lack of sales tax and strategic location contribute to overall affordability. 

  • Average home price: $300,500. 

  • Population: 990,000. 

  • Lifestyle: Offers a coastal lifestyle with easy access to beaches and a mix of small towns and urban areas. 

  • Employment opportunities: Financial, healthcare, and education. 

  • Pros: No sales tax and close to major cities and coastal attractions. 

  • Cons: Higher property prices and small size limit options for rural living. 

Oklahoma 

Oklahoma's housing is affordable because of its low land costs, modest demand, and economical construction expenses. 

  • Average home price: $168,500. 

  • Population: 3.9 million. 

  • Lifestyle: Offers a mix of urban and rural living with strong community values. 

  • Employment opportunities: Energy, agriculture, and aviation. 

  • Pros: Low cost of living and diverse job opportunities. 

  • Cons: Prone to tornadoes and limited cultural and recreational activities. 

Kentucky 

Economic factors and a lower cost of living drive Kentucky’s affordable housing market. 

  • Average home price: $173,300. 

  • Population: 4.5 million. 

  • Lifestyle: Famous for its horse racing and natural beauty, offering a relaxed and culturally rich lifestyle. 

  • Employment opportunities: Agriculture, automotive, and manufacturing. 

  • Pros: Low cost of living and beautiful landscapes. 

  • Cons: Limited economic diversity and variable weather with humid summers. 

Ohio 

Ohio's housing is affordable because of its balanced economy, ample housing supply, and moderate cost of living. 

  • Average home price: $180,200. 

  • Population: 11.7 million. 

  • Lifestyle: Offers a balance of urban and rural lifestyles, with major cities providing diverse cultural and recreational opportunities. 

  • Employment opportunities: Manufacturing, healthcare, and education. 

  • Pros: Strong job market and excellent healthcare facilities. 

  • Cons: Harsh winters and some areas with economic stagnation. 

Alabama 

Alabama’s housing remains affordable due to its low land costs, relatively modest demand, and lower overall cost of living. 

  • Average home price: $172,800. 

  • Population: 4.9 million. 

  • Lifestyle: Known for its warm climate, southern hospitality, and relaxed pace of life. 

  • Employment opportunities: Aerospace, manufacturing, and agriculture. 

  • Pros: Low cost of living, rich history. 

  • Cons: Higher poverty rates, some areas prone to severe weather. 

Tips for finding affordable homes 

Finding an affordable home requires a strategic approach.  

Here are some tips you should consider: 

  • Research markets: Start by researching housing markets across different states. Use online tools like Zillow or Realtor.com to identify and compare home prices and market trends. 

  • Engage a good real estate agent: A knowledgeable real estate agent can provide valuable insights into local markets and help you find the best deals. 

  • Timing the market: Housing markets fluctuate, so timing your purchase can make a significant difference. Look for trends indicating a buyer’s market. 

  • Explore multiple areas: Don’t limit your search to one state or region. Explore various places to find the best fit for your lifestyle and budget. 

What are the challenges and considerations when buying in a low-cost state? 

Buying a home in one of the states with the cheapest real estate can offer significant financial benefits, but it also comes with challenges: 

  • Lower investment returns: Homes in low-cost states may not appreciate in value as quickly as those in more expensive markets, potentially resulting in lower long-term investment returns. 

  • Economic instability: Some low-cost states may have less stable economies, affecting job security and market stability. 

  • Fewer amenities: Low-cost states may lack some of the amenities and services found in more urbanized areas, such as top-tier healthcare facilities, educational institutions, and cultural attractions. 

  • Limited public transportation: In many affordable states, public transportation options are limited, necessitating reliance on personal vehicles. 

Get expert financial advice 

Finding the cheapest state to buy a house involves weighing various factors, from economic conditions to job opportunities and lifestyle preferences. While buying in a low-cost state comes with its own set of challenges, the potential for lower living expenses and a more relaxed lifestyle can make it a worthwhile choice for many.  

The key is to align your home purchase with your financial goals and lifestyle preferences, ensuring that your new home provides not just affordability but also a fulfilling living experience. 

Let Unbiased connect you with a financial advisor for expert financial advice tailored to navigating the diverse landscape of affordable housing markets across the United States. 

Writers

Unbiased team

Our team of writers, who have decades of experience writing about personal finance, including investing and retirement, are here to help you find out what you must know about life’s biggest financial decisions.