Homebuilder Says It’s ‘Incredibly Difficult’ To Profit From a Traditional Starter Home

There are around 300,000 fewer starter homes on the market today than there were before the COVID-19 pandemic, and Lamonte Grulke thinks he knows why.Grulke is a general contractor and builder based in Little Rock, AR, who recently went viral on X for breaking down the costs of building a home and explaining why it simply doesn't make fiscal sense for builders to focus on the starter home market."As a Home Builder who can and does build starter homes, I promise you, it’s incredibly difficult for me to make money from a 1k sqf home," he wrote. "I have a starter home coming up that I hope sells for 235k~ anything less and I basically worked for free."In an exclusive interview with Realtor.com®, Grulke explains that homebuilders are grappling with rising materials and labor costs, and that many costs are fixed regardless of the size of a home—squeezing margins on smaller floor plans.Nationally, starter home prices are on the rise. Between 2019 and 2026, the national median price for a starter home rose from $256,000 to $344,000, according to Realtor.com research.Starter homes are typically smaller than the average property. They're defined by their affordability and are typically pric...