Best cities for first-time home buyers revealed

As home prices and mortgage rates continue to challenge aspiring homeowners, new data is identifying the cities offering the best opportunities for first-time buyers.

WalletHub, a personal finance website, compared 300 U.S. cities across 22 metrics measuring housing affordability, market attractiveness and quality of life. Factors included cost of living, real estate taxes, crime rates and housing inventory.

Palm Bay, Florida ranked best city for first-time home buyers

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Palm Bay, Florida, earned the No. 1 ranking thanks to its abundant housing inventory, with one of the nation's highest rates of active home listings and new building permits per capita. 

The city also boasted the fourth-highest millennial homeownership rate, signaling that younger buyers are finding success in the market.

The city's housing market has also delivered strong returns for homeowners. Home values in Palm Bay increased 107% between 2018 and 2024, the fourth-highest appreciation rate among the cities studied.

Palm Bay wasn’t the only Florida city that was ranked high for first-time home buyers – three of the top 10 cities were in Florida.

"Buying a home for the first time is a very stressful and difficult process, especially when housing prices are through the roof and interest rates have risen sharply in the past few years," Chip Lupo, a WalletHub analyst, said in a statement. "The best cities for first-time home buyers not only are affordable both in terms of buying a house and living there afterward, but they also have a lot of housing choices as well as low crime rates and good schools."

Arizona markets round out top 3 spots

Dig deeper:

Surprise, Arizona and Gilbert, Arizona, rounded out the top three spots. 

Surprise ranked second, driven by a strong supply of new homes and a high number of active listings. The city also ranked among the safest in the study, posting the 10th-lowest violent crime rate and the fifth-lowest property crime rate. Home values there climbed roughly 93% from 2018 to 2024.

Meanwhile, Gilbert stood out for its low real estate tax rate, strong pace of new residential construction and healthy job market. Nearly half of millennials in Gilbert (46%) owned their homes, giving the city the 18th-highest millennial homeownership rate in the nation. Gilbert also ranked among the safest cities in the study and recorded an 85% increase in home values between 2018 and 2024.

Best places for first-time home buyers

1. Palm Bay, Florida
2. Surprise, Arizona
3. Gilbert, Arizona
4. Tampa, Florida
5. Yuma, Arizona
6. Peoria, Arizona
7. Boise, Idaho
8. Chandler, Arizona
9. Orlando, Florida
10. Murfreesboro, Tennessee

See the full report here. 

First-time home buyers face challenges

Why you should care:

The rankings come at a time when first-time buyers are facing growing obstacles. According to WalletHub, first-time purchasers accounted for just 21% of the housing market last year, well below the historical average of 40%.

Last week, the average rate on a long-term U.S. mortgage moved closer to 6.5%, increasing borrowing costs for prospective homebuyers.

RELATED: Mortgage rates are climbing: What homebuyers need to know

Mortgage rates have remained elevated after the average rate on a 30-year loan briefly dropped below 6% in February for the first time since late 2022. It then climbed in May to its highest level in nine months. The uptick in mortgage rates has weighed on home sales this year.

Expectations of hotter inflation amid higher crude oil prices have pushed up long-term bond yields relative to where they were before the war with Iran began in late February, causing mortgage rates to trend higher.

Real EstateU.S.