Mar 7, 2024
10-MINUTE READ
AUTHOR:
LAUREN NOWACKIShare:
Last updated: September 2023
When it comes to choosing a place to unpack and stay awhile, affordability is often top of mind for many home buyers. Whether it’s drawing from a need to find cheaper real estate or the goal to get the biggest bang for their buck, today’s buyers are on the hunt for real estate that is within stricter budgets. And one of the first steps they should take in finding affordable housing is finding the cheapest state to buy a house.
Key Findings
- West Virginia is the cheapest state to buy a house in 2024
- Alabama has the lowest property tax rate of the top 10 cheapest states to buy a home
- Most of the top 10 states have median home values under $200,000
What Is The Cheapest State To Buy A House?
As of August 2023, the state of the housing market is a challenging one for many home buyers – and is expected to continue to be for several reasons. At the time of writing, interest rates remain above 6% and home prices remain elevated, especially compared to prices just a couple years ago. Of course, as we reveal, there are some places where housing prices are less inflated – where median prices are even below $200,000.
There are many decisions that go into buying a house, and deciding where to live is one of them. Buyers who are using affordability as a factor in choosing their state should take into consideration not just home prices, but also expenses like taxes and insurance. In finding the cheapest states to live, we considered those expenses. This list was built using the following metrics:
- Median home value
- Real estate (property) tax rate
- Cost of living
- Housing price index movement
- Average annual homeowners insurance cost
It’s important to keep in mind – as with any affordable area – while the cost of living and home price are lower than other areas of the country, so is the median household income.
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10 Cheapest States To Buy A House
Those who are more budget-focused in their home shopping efforts may want to consider looking in the following states.
Table Of Contents For The 10 Cheapest States:
1. West Virginia
2. Alabama
3. Mississippi
4. Arkansas
5. Louisiana
6. Indiana
7. Delaware
8. Oklahoma
9. Kentucky
10. Ohio
3 More Of The Cheapest States To Buy A Home:
1. Iowa
2. Missouri
3. Kansas
1. West Virginia
- Median home value: $143,200
- Cost of living index: 90
- Median household income: $51,248
Packed into West Virginia are quaint small towns, active college towns, historical settings and national parks with radiant fall foliage. No matter where in the Mountain State you choose to live, you’ll likely find an affordable abode. West Virginia has the lowest median home value of any state on our list at $143,000. See what type of property you can get within your budget by checking out the homes for sale in West Virginia.
2. Alabama
- Median home value: $172,800
- Cost of living index: 89
- Median household income: $53,913
When it comes to property taxes by state, Alabama has the lowest rate on this list and the second lowest rate in the country. But just because these taxes – which go toward public schools, services and amenities – are lower, it doesn’t mean state residents are missing out. Depending on the city, Alabama is filled with museums, parks and an educational system that includes five schools that were named National Blue Ribbon Schools in 2023. Interested in settling down in the Yellowhammer State? Check out homes for sale in Alabama.
3. Mississippi
- Median home value: $145,600
- Cost of living index: 85
- Median household income: $48,716
The Magnolia State is known for its southern hospitality, cuisine and blues music – among other charms. Another benefit of living in Mississippi is the affordability. At 15% under the national average cost of living, Mississippi has the lowest cost of living among the top cheapest states to buy a house. For more information on what’s available, check out homes for sale in Mississippi.
4. Arkansas
- Median home value: $162,300
- Cost of living index: 90
- Median household income: $52,528
From bustling metro areas like Little Rock and Fayetteville to quiet Ozark Mountain towns, Arkansas has affordable areas to fit various lifestyles and budgets. The Natural State lives up to its name, with sandstone formations, natural springs and swimming holes and the world’s longest bayou. If Arkansas sounds like the next place you’ll call home, check out houses for sale in Arkansas.
5. Louisiana
- Median home value: $192,800
- Cost of living index: 92
- Median household income: $52,087
Louisiana is a vibrant state with a deep cultural heritage: from French Caribbean architecture, Cajun cuisine, Mardi Gras celebrations and more than 400 free festivals a year, to the rich history of jazz and the laid-back bayous, to countless swamps and marshes perfect for wildlife viewing and fishing. No matter where your Louisiana home search takes you, you’ll find a lower cost of living and home value. If you’re ready to move to the Pelican State, check out houses for sale in Louisiana.
6. Indiana
- Median home value: $182,400
- Cost of living index: 92
- Median household income: $62,743
This is the second year in a row Indiana has made our list of cheapest states to buy a home and is the top Midwestern state for affordability in 2024. At $62,743, its median household income is the highest on the list, but still below the national median, which was $74,580 in 2022, according to the census. Luckily, the state’s cost of living is also below the national average. If you’re interested in buying a house in the Hoosier State, check out homes for sale in Indiana.
7. Delaware
- Median home value: $300,500
- Cost of living index: 103
- Median household income: $71,091
While Delaware has a higher median home value and cost of living index, it has the lowest average annual homeowners insurance cost among the top 10 cheapest states and one of the lowest property tax rates. There’s another benefit residents enjoy when it comes to taxes: Delaware does not impose a state or local sales tax. To enjoy the advantages of living in the First State, the first step is searching homes for sale in Delaware.
8. Oklahoma
- Median home value: $168,500
- Cost of living index: 86
- Median household income: $55,826
Oklahoma may be land-locked, but residents can still enjoy a refreshing dip in one of more than 200 manmade lakes – the most in any state in the country. Something else inhabitants may find refreshing about the Sooner State is it’s cost of living. At 14% below the national average, Oklahoma has one of the lowest costs of living on this list. To find your next place to live, review the current homes for sale in Oklahoma.
9. Kentucky
- Median home value: $173,300
- Cost of living index: 94
- Median household income: $55,573
While hundreds of thousands of visitors flock to Kentucky for one of the most prestigious horse races in the world, the Kentucky Derby, more than 4.5 million people call the Bluegrass State Home. And with good reason. The state is known for having a low cost of living and median home value. But there’s more to Kentucky than low prices and horse races. It also features a massive underground cave system, lush forests, waterfalls and mountains. City dwellers can find excitement in Louisville or Lexington, while others who prefer an unhurried way of life will find home in one of many rural areas. Find your place of belonging by checking out the homes for sale in Kentucky.
10. Ohio
- Median home value: $180,200
- Cost of living index: 94
- Median household income: $62,262
Ohio’s leading industries range from steel production and motor vehicle assembly to agriculture, finance and research and development. Meanwhile, top employers include health systems, grocers, military and academic institutions, most notably Ohio State University. Just as diverse is the Ohio landscape – featuring farmlands, big city skylines and roller coaster summits. To make the Buckeye State your next residence, search current homes for sale in Ohio.
Cheapest States To Buy A House At A Glance
Along with the purchase price, buyers will also need to pay annual real estate (or property) taxes and homeowners insurance.
| Rank | State | Median Yearly Real Estate Taxes Paid | Effective Real Estate Tax Rate | Housing Price Index Movement (since Q1 1991) | Average Yearly Homeowners Insurance |
|---|---|---|---|---|---|
| 1 | West Virginia | $785 | 0.55% | 190.61 | $2,996 |
| 2 | Alabama | $674 | 0.39% | 240.23 | $4,123 |
| 3 | Mississippi | $1,097 | 0.75% | 195.71 | $4,578 |
| 4 | Arkansas | $928 | 0.57% | 233.62 | $4,598 |
| 5 | Louisiana | $1,065 | 0.55% | 248.78 | $3,494 |
| 6 | Indiana | $1,371 | 0.75% | 219.54 | $3,631 |
| 7 | Delaware | $1,602 | 0.53% | 199.48 | $1,944 |
| 8 | Oklahoma | $1,424 | 0.85% | 250.07 | $6,387 |
| 9 | Kentucky | $1,382 | 0.80% | 255.55 | $4,049 |
| 10 | Ohio | $2,534 | 1.41% | 200.75 | $2,760 |
3 More Of The Cheapest States To Buy A Home
There are many great and affordable places to buy a house and what’s best for each home buyer will depend on their lifestyle, budget and goals. While the following list of states isn’t based on our metrics, it does include states that are other popular choices for many home buyers that have home values below $200,000 and costs of living below the national average.
1. Iowa
- Median yearly real estate taxes paid: $2,618
- Median home value: $174,400
- Effective real estate tax rate:1.50%
- Cost of living index: 89.7
- Average yearly homeowners insurance: $3,482
- Median household income: $65,600
A lower cost of living and median home value below $175,000 makes Iowa another affordable state. In fact, it was one of the cheapest states to buy a home in 2023. It offers rolling hills of green and plenty of room to plant your roots. Des Moines and Cedar Rapids balance both city and countryside life. To find your home in the Hawkeye State, search current houses for sale in Iowa.
2. Missouri
- Median yearly real estate taxes paid: $1,746
- Median home value: $198,300
- Effective real estate tax rate:0.88%
- Cost of living index: 88
- Average yearly homeowners insurance: $4,189
- Median household income: $61,847
While Missouri may be famous for its gigantic objects, including its famous arch, giant eight ball and world’s largest chess piece, underwear and pencil, its expenses aren’t colossal. With a real estate tax rate below 1% and a median home value under $200,000, the Show-Me State may be a good option for those with a tighter housing budget. To see what’s available in your price range, check out the homes for sale in Missouri.
3. Kansas
- Median yearly real estate taxes paid: $2,445
- Median home value: $183,800
- Effective real estate tax rate:1.33%
- Cost of living index: 87.7
- Average yearly homeowners insurance: $5,427
- Median household income: $64,124
Almost 3 million people agree with Dorothy – when it comes to Kansas, there’s no place like home. From its cultural offerings, small town communities, tallgrass prairies and, of course, affordability, there’s plenty of reasons people love to call the Sunflower State home. If you’re looking to put down roots in the Midwest, consider homes for sale in Kansas.
Expert Money-Saving Tips
Moving to a place with lower home prices is helpful for home buyers on a tight budget, but you can save money during the home buying and moving process no matter where you choose to live.
Get More Specific Location Information
Along with researching the cheapest state to buy a house, dive deeper into more precise locations by searching real estate markets, home values and costs of living at a county – or even city – level. You may be surprised to find a low-cost location in an otherwise expensive state to buy a home.
Downsize Your Must-Have List
Being a little more flexible with your must-haves can also help. If you’re able, you may want to consider buying a home that has less square footage, a smaller yard or is farther away from amenities.
Improve Your Financial Situation
Saving up a larger down payment may mean you won’t have to borrow as much money – or could give you more spending power. Increasing your salary, paying off debt and/or improving your credit score can all have a positive impact on the terms of your mortgage as well, meaning you could enjoy a lower interest rate, which will make the total cost of your loan cheaper.
The Bottom Line
When it comes to choosing a home, there are many things to consider. The right choice will depend on your needs, lifestyle and individual goals. If price is one of the factors that will determine the home you buy and the area you purchase it in, don’t just make your decision based on home price. Consider homeowners insurance, property taxes and the area’s cost of living, too.
When you’ve done your research, created a budget and weighed the pros and cons, you’ll have better prepared yourself to buy a house. When you’re ready, get started on an application today and take one step closer to homeownership.
Methodology: Finding The Cheapest States To Buy A House
Rocket HomesSM collected and analyzed the most recent data on real estate taxes, home value, cost of living index, housing price index movement and homeowner’s insurance to give us insight into the cheapest states to buy a house.
Each state’s metrics were individually ranked before weights were applied to each metric depending on their individual importance. The final scores were then sorted to produce the final rankings. Median yearly real estate taxes are an average of owner-occupied units with and without a mortgage. Effective property tax rate was calculated by dividing median yearly real estate taxes by median home value. Housing price index movement is based on changes in house prices since quarter 1 of 1991 according to the Federal Housing Finance Agency (FHFA). Average homeowner’s insurance is based on an average annual rate for $400,000 in dwelling coverage. All U.S. Census Bureau data is based on 2021 1-year estimates.
| Metric | Weight | Level | Source |
|---|---|---|---|
| Median home value | 27% | State | U.S. Census |
| Effective Real Estate Tax Rate | 27% | State | U.S. Census |
| Cost Of Living Index | 14% | State | The Council For Community And Economic Research |
| Housing Price Index Movement | 17% | State | Federal Housing Finance Agency |
| Average Yearly Homeowner’s Insurance | 15% | State | Insurance.com |
Other metrics considered without weight:
| Metric | Level | Source |
|---|---|---|
Median Real Estate Taxes Paid | State | U.S. Census |
Median Household Income | State | U.S. Census |
State population | State | U.S. Census Population Estimates, July 1, 2022 |
| Rank | State | Median Yearly Real Estate Taxes Paid | Effective Real Estate Tax Rate | Housing Price Index Movement (since Q1 1991) | Average Yearly Homeowners Insurance |
|---|---|---|---|---|---|
| 1 | West Virginia | $785 | 0.55% | 190.61 | $2,996 |
| 2 | Alabama | $674 | 0.39% | 240.23 | $4,123 |
| 3 | Mississippi | $1,097 | 0.75% | 195.71 | $4,578 |
| 4 | Arkansas | $928 | 0.57% | 233.62 | $4,598 |
| 5 | Louisiana | $1,065 | 0.55% | 248.78 | $3,494 |
| 6 | Indiana | $1,371 | 0.75% | 219.54 | $3,631 |
| 7 | Delaware | $1,602 | 0.53% | 199.48 | $1,944 |
| 8 | Oklahoma | $1,424 | 0.85% | 250.07 | $6,387 |
| 9 | Kentucky | $1,382 | 0.80% | 255.55 | $4,049 |
| 10 | Ohio | $2,534 | 1.41% | 200.75 | $2,760 |
Lauren Nowacki
Lauren is a Content Editor specializing in personal finance and the mortgage industry. Her writing focuses on reporting the best places to live in the U.S. based on certain interests and lifestyles. She has a B.A. in Communications from Alma College and has worked as a writer and editor for various publications in Philadelphia, Chicago and Metro Detroit.
