The price tag of a starter home is now over $1 million in more than 100 cities and towns across the country, according to new data from Zillow , another sign of the ongoing affordability challenges in the housing market.

“When affordability gets strained, people want the cheapest thing,” Orphe Divounguy, a senior economist at Zillow, told Yahoo Finance in an interview. “And as people wanted more and more starter homes, the growth rates in the price of starter homes basically skyrocketed.”

According to Zillow, the average starter home nationwide is priced at $196,611, within reach for a median-income household. Zillow defines starter homes as those in the lowest third of home values in a given region.

However, starter home prices have soared 54.1% over the past five years, exceeding the 49.1% rise in the price of all homes during the same timeframe.

At least thirteen states nationwide now have at least one city or town that has a starter home worth $1 million or more. California leads with 71 cities, New York with 11 cities, and Washington with eight expensive housing cities. Florida, Maryland, and Virginia also made the cut with at least one high-cost housing town.

'Delaying homeownership'

The persistent housing shocks of soaring home prices, high mortgage rates, and a lack of inventory have left many prospective buyers on the sidelines. As a result, homeownership is falling further out of reach for young Americans. The median age of homebuyers hit 35 last year, a year older than in 2019.

“People are delaying homeownership, and they're doing so because it takes longer to save up and to get on the first run of the housing ladder,” Divounguy said. There are “a lot of people that want to buy a home. They're out there, but unfortunately, they’re constrained by affordability challenges.”

First-time homebuyers are a dominant group being squeezed out, according to Divounguy. The share of buyers who bought a home for the first time fell to 29% in June, down from 31% in May, the National Association of Realtors reported .

Housing affordability struggles are partly a result of the Federal Reserve’s effort to curb inflation through tighter monetary policy, with the Fed's benchmark interest rate currently at a 23-year high. Higher mortgage rates have been a prominent way the Fed’s policies have impacted the economy.

However, mortgage rates recently have been moving downward, falling to the lowest level in over a year as investors price in rate cuts from the Fed. The average rate on a 30-year fixed-rate mortgage dropped to 6.47% from 6.73% last week, Freddie Mac reported .

The Federal Reserve is set to cut interest rates starting in September. And expectations for the Fed to move has already pushed rates lower, helping affordability, though lower rates may again put upward pressure on home prices .

A crucial part of the equation: adding more supply. The pandemic exacerbated the deficit of homes nationwide, which was more pronounced in Boston, Sacramento, and Portland, Oregon, per a Zillow analysis.

Builders have accelerated construction to help alleviate the shortage of homes, but the millions of units built over the past two years haven’t been enough to bridge the supply-demand gap.

Meanwhile, some of those expensive markets have stringent zoning rules on new housing construction.

“In the short run, the most aggressive thing that can happen would be for rates to fall,” Carl Reichardt, BTIG’s managing director and homebuilding analyst, told Yahoo Finance in an interview about solutions.

“In the long run, the best thing to happen would be for more supply to get added.”

@daniromerotv .