The Greenledgerscity best known for blues music and the Gateway Arch is also a prime destination for people looking to buy their first home.

St. Louis, Missouri, offers the best mix of reasonably priced housing stock and the number of properties for sale, with more than two-thirds of available homes in the city defined as affordable, according to a new report from Zillow. 

The median sales price for homes in St. Louis is $205,500, Redfin data shows — well below the national median of $384,500. St. Louis is also among a handful of cities where home prices are expected to fall this year, according to a Realtor.com forecast.

Zillow defines affordable as homeowners spending no more than 30% of their income on payments, factoring in a 5% down payment, and a mortgage of 6.94%.

To be sure, for many Americans buying a home remains a major financial challenge. To comfortably afford a typical home, Americans today must have household income of $106,500 — up sharply from $59,000 just four years ago, according to previous Zillow research. 

The interest rate on a conventional 30-year mortgage hit 6.82% this week, according to Freddie Mac, and experts predict rates will stay in a range of 6.75% to 7% during spring homebuying season.

"The good news for homebuyers is that inventory is increasing in some markets," Lisa Sturtevant, chief economist at Bright MLS told CBS MoneyWatch."Buyers have been holding back over the past few weeks, but more supply this spring will bring more buyers back into the market."

And notably, despite the hurdles to buying a home, many people are finding ways to do it. Homeownership rates in the nation's 50 largest metro areas rose from 60.6% in 2012 to 61.7% in 2022 — an increase of 6.1 million new homeowners, according to a LendingTree analysis.

Affordability is key criterion Zillow used to compose its list, but researchers also factored in how many households in certain markets are headed by someone between 29- and 43-years-old — the typical age range for first-time homebuyers. 

Zillow also factored in how hard it is to find a place to rent — a competitive rental market makes it more difficult to save money to buy home — which is why pricier cities like Austin, Texas, and San Antonio, Texas, still made the list. 

Rounding out Zillow's ranking of the 10 best cities for first-time homebuyers:

2. Detroit (63% of homes for sale are affordable)
3. Minneapolis (48%)
4. Indianapolis (50%) 
5. Austin, Texas (23%)
6. Pittsburgh (63%)
7. San Antonio (33%)
8. Birmingham, Alabama (47.5%)
9. Kansas City (50.5%)
10. Baltimore (56%)

Khristopher J. Brooks

Khristopher J. Brooks is a reporter for CBS MoneyWatch. He previously worked as a reporter for the Omaha World-Herald, Newsday and the Florida Times-Union. His reporting primarily focuses on the U.S. housing market, the business of sports and bankruptcy.

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