As of early 2026, states with high rates of new construction and specific policy initiatives targeting, or likely to increase, the supply of starter homes include Idaho, Texas, Florida, Utah, North Carolina, and South Carolina. These states are largely focused on increasing density, reducing minimum lot sizes, and fostering rapid development to meet demand.
Here is a breakdown of states and regions focused on building starter homes in 2026:
Top States for New Construction (2026)
Idaho: Ranked as the hottest real estate market for 2026, featuring the highest rate of new home builds in the country (91 per 10,000 people).
Texas: Continues to lead in total building permits and, alongside Florida, is experiencing a significant increase in new home supply, which is beginning to bring prices down in some areas.
Utah: A major push is underway to build 35,000 new starter homes by late 2028, with 2026 legislation focused on allowing smaller lots and "Utah First Homes" projects.
The Carolinas (NC & SC): Rank high in new, relatively affordable, per-capita construction.
Arizona: Top-ranked for new construction permits per 1,000 residents.
States with Legislative "Starter Home" Reforms
Several states are actively changing zoning laws to allow for smaller, more affordable homes in 2026:
Utah: HB 184 encourages the construction of homes on smaller lots and modular housing.
Florida: Advancing legislation (Senate Bill 948) to restrict local government authority over land-use, specifically to enable more, smaller starter homes.
Texas & Maine: Passed legislation reducing minimum lot sizes to foster smaller, more affordable housing options.
Massachusetts: Considering a, 2026 ballot initiative to allow single-family homes on lots as small as 5,000 square feet.
Key Trends Driving 2026 Construction
"Small lot" zoning: Reforms are aimed at reducing mandatory minimum lot sizes to make projects financially viable for builders.
Sun Belt Growth: Rapid development continues in the South and West due to migration, with a focus on suburban, single-family homes in states like Georgia and Tennessee.
Modular Homes: Gaining momentum in states like Utah as a faster, cheaper, factory-built alternative.
Top Cities for First-Time Buyers in 2026
While
the above are state-level trends, Realtor.com's 2026 analysis identifies
specific cities where affordability makes first-time, or starter home,
purchases more likely:
Rochester,
NY
Harrisburg,
PA
Granite
City, IL
Birmingham,
AL
North
Little Rock, AR
Syracuse,
NY
Baltimore,
MD
St.
Louis Park, MN
Pittsburgh,
PA
Ohio (various locations)
In 2026, several states are leading in starter home construction through targeted legislation and high per-capita build rates. The most prominent activity is occurring in the following states:
Utah: Governor Spencer Cox has set a "moonshot" goal to build 35,000 starter homes by 2028. In early 2026, the state introduced House Bill 184, which encourages building on smaller lots and allows modular home regulations to lower costs.
Florida: Lawmakers are advancing Senate Bill 948 in 2026, which aims to prohibit restrictive land development rules that currently stifle the construction of smaller starter homes.
Indiana: Similar to Florida, Indiana's House Bill 1001 was approved in early 2026 to reduce regulations and make it easier to build entry-level homes on smaller urban lots.
Massachustts: A 2026 ballot initiative is under consideration to allow single-family homes on lots as small as 5,000 square feet, specifically aimed at increasing starter home inventory.
Texas: Texas continues to be a national leader in total housing permits, with legislative efforts focused on reducing lot sizes and increasing the density of "single-stair" multi-unit buildings to create affordable options.
Idaho:
Ranked as the hottest
real estate market entering
2026,
Idaho leads the country in new builds per capita, with approximately 91 new homes per 10,000 residents.
According
to Realtor.com's
2026 forecasts,
specific cities in New
York (Rochester), Pennsylvania (Harrisburg), Ohio,
and Alabama
are also highlighted as top markets for first-time buyers due to relatively high builder activity and affordability.
https://www.google.com/search?q=what+states+are+building+starter+homes+in+2026+google
Norb Leahy, Dunwoody GA Tea Party Leader
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