The cost of buying a home varies significantly across states. The most holistically affordable option isn’t always the place with the cheapest home price tags. The most affordable states to own a home are  the ones where your dollar goes the furthest when you take all costs into account, including home prices, property taxes, insurance, utilities, and other ongoing ownership expenses

The average rate on a 30-year fixed-rate mortgage was approximately 6.30% at the end of April 2026. Similarly, data from the FHFA House Price Index shows that home values continue rising. Given these factors, affordability matters now more than ever.

This article compares housing value across states using home prices, cost per square foot, household income, property taxes, sales taxes, and electricity costs to help you identify where you’ll get the best value when buying a home.

How we defined housing value by state

We evaluated housing value across states using factors that reflect the actual cost of homeownership rather than simply the average home’s price tag. Weighted categories include:

• Purchase affordability: To account for this factor, we looked at the median home price, cost per square foot, median household income, and price-to-income ratio.
• Tax burden: We looked at data for both the effective property tax rate and the combined state and local sales tax rate.
• Utility costs: We looked at the average price per kilowatt-hour for electricity in each state, and natural gas prices should also be factored into local utility costs.

Methodology:

We applied the following weights when calculating our rankings: purchase affordability (30%), price-to-income ratio (20%), cost per square foot (15%), property tax burden (15%), sales tax burden (10%), and electricity costs (10%).
 

In addition to the weighted factors we considered, we also looked at other factors, such as homeowners insurance costs and housing supply trends. While we didn’t factor these into our methodology, they’re important to consider when you’re weighing your own options.

Quick answer: the states that offer the best all-in housing value

Based on our data and methodology, the states that offer the best all-in housing value are:

1. West Virginia: One of the most affordable states, thanks to its extremely low housing prices, low effective property tax rates,   but among the lowest household incomes.
2. Mississippi: A cost per square foot well below the national average, so you can afford significantly more space for your money, but with the trade-off of very low household incomes.
3. Kentucky: Solid all-around value, with affordable homes, property taxes, sales taxes, and electricity.
4. Louisiana: Exceptionally low property taxes and electricity, but among the highest homeowners insurance costs because of its location on the coast, not to mention a high sales tax rate.
5. Alabama: Boasts the lowest property tax rate in the country; especially appealing for retirees, but slightly offset by one of the highest combined sales tax rates.
6. Arkansas: Affordable home prices and property taxes, but among the highest combined sales tax rates in the country.
7. Oklahoma: Solid all-around value with low home prices and moderate taxes, with the added benefit of a growing job market in certain key industries.
8. Indiana: Leading Zillow’s best markets to buy a home in 2026, with all-around affordability.
9. Iowa: Offers affordable homes and economic stability, but with the trade-off of high property taxes.
10. North Dakota: Affordable median home price with low electricity costs, but slightly offset by an above-average combined sales tax rate.

Housing value can vary widely within each state. The value in any state’s largest metro area won’t be comparable to its most rural area. Keep that in mind when analyzing data.

It’s also worth noting that these rankings only take into account financial value. For many families, the best place to buy a home has to do with far more than the numbers. While these figures may be a starting point if you’re prioritizing affordability, they likely won’t (and shouldn’t) be the only factors you consider.

The full ranking table: comparing housing value across states

Sources: Zillow, Federal Reserve Bank of St. Louis, U.S. Census Bureau. Tax Foundation, EIA

Which states have the lowest cost per square foot?

West Virginia, Mississippi, and Louisiana have the lowest price per square foot of any state, and all three are considerably lower than the national average. Cost per square foot is a useful metric for comparing housing prices, because it tells you how much physical house you’re getting for your money. 

Of course, a low cost per square foot doesn’t necessarily mean lower homeownership costs. A more spacious home in a state with high property taxes or insurance costs could easily become more expensive than a state with a slightly higher cost per square foot.

The Federal Reserve Bank of St. Louis releases monthly national median price per square foot data so you can compare costs in real time.

Property taxes and sales taxes can change the value equation fast

Your mortgage payment alone doesn’t tell the entire story of the cost of homeownership. A $250,000 home in a high-tax state can cost significantly more to own than a $300,000 home in a lower-tax state. 

Property taxes by state

Local governments impose property taxes to pay for services such as schools, police and fire departments, and infrastructure. Effective property tax rates vary, from as low as 0.29% in Hawaii to 1.88% in Illinois and New Jersey, according to the Tax Foundation. In some counties around the country, the typical property tax bill can easily exceed $10,000 per year, which makes homeownership particularly expensive.

It’s worth considering what your property taxes buy you. For example, some of the counties with higher property tax burdens may also have highly-rated schools. You may decide the added cost is worth it.

There are some tax benefits to homeownership. For example, you can deduct your state and local taxes (known as the SALT deduction), including property taxes, on top of your mortgage interest. But that doesn’t fully offset the tax burden.

To see how your state’s property taxes stack up, see the average property taxes by state and county.

Sales taxes and everyday cost of living

Sales taxes increase the cost of everyday life. While they don’t show up on a mortgage statement like your property taxes do, they apply to nearly everything you buy for your home, from furnishings to repairs to maintenance.

States impose sales taxes, and many local governments do as well, according to the Tax Foundation. Louisiana has the highest combined state and local sales tax rate in the country, followed by Tennessee, Washington, and Arkansas. 

On the other end of the spectrum, five states – Alaska, Delaware, Montana, New Hampshire, and Oregon – impose no sales tax at all. Of those five states, only Alaska allows local governments to impose sales taxes.

Utilities matter too: Monthly costs don’t stop at the mortgage

Your actual housing costs include your recurring bills, not just the principal and interest on your mortgage. Electricity is one of the bills that homeowners pay monthly, and it varies significantly from state to state. The U.S. Energy Information Administration publishes residential electricity price data, making it easy to compare across states.

North Dakota, Nebraska, and Missouri have the cheapest average electricity rates. Meanwhile, homeowners in Hawaii, California, and Maine pay the most.

Keep in mind that utilities such as gas, water, sewer, and internet may have more localized price differences. It’s helpful to look more closely at the average price in your city or county for a truly accurate comparison.

Why the cheapest homes are not always the best housing value

While home price is important, it’s not the only factor that goes into affordability. For example, situations where housing prices can be deceptive include:

• Low home prices and high taxes: A high property tax rate can quickly eat away at any savings from a lower home price. Nebraska and Texas, for example, despite having lower-priced homes, have high property tax rates that may offset those savings.
• Low home prices and weak income alignment: Some states with the lowest-priced homes also have the lowest median incomes. In states like Mississippi and West Virginia, where household incomes are lowest, even a low-priced home feels expensive.
• Low home prices and high recurring costs: If your monthly costs for utilities or insurance are high, a more affordable home doesn’t feel so affordable. For example, Louisiana’s affordable housing is slightly offset by its high homeowners insurance rates.
• Low home prices and supply constraints: Even in a market with affordable housing today, rapid migration and limited new construction can quickly change the market. These factors could push housing prices higher. See the biggest housing shortages in U.S. cities to learn where this is already happening.

Homebuilding and supply trends can signal future value

As we briefly mentioned, housing supply and new construction can signal future trends in the housing market. For example, affordable markets where there is extensive new construction are likely to remain affordable. Meanwhile, markets where new construction is limited may tighten and see prices start to rise.

States building the most new housing include Texas, Florida, and California, according to U.S. Census Bureau data. These markets may offer more stable long-term affordability than markets where inventory is lower. On the other end of the spectrum, North Dakota and West Virginia, which are generally more affordable, have limited new construction, which could push housing prices up in the future.

What this means for first-time buyers

Most first-time home buyers want the opportunity to build equity in a market where monthly payments are more manageable and where the median income easily absorbs the cost of homeownership.

In these more affordable states, down payments and monthly payments are lower thanks to the lower overall housing prices. However, it’s critical that you pay attention to other recurring costs, including taxes, utilities, and insurance.

What this means for retirees and downsizers

For retirees, the calculation is a bit different. You’re likely worried less about the upfront price and more about your annual recurring costs. A home that costs $225,000 to purchase but has high property taxes may be more expensive long-term than a $275,000 home with a lower tax rate.

If you’re in this phase of life, consider states with lower tax burdens, as well as smaller, more energy-efficient homes to help lower your ongoing costs. If you’ve owned your home for a long time, you may also look for ways to turn your home equity into cash. Many homeowners don’t realize just how big an asset their homes can be in retirement.

Finally, make sure to consider the costs of both buying and renting, as well as the hidden costs that come with moving out of your long-term home, even if it means saving money elsewhere.

State averages can hide a lot, so check the metro too

Statewide data is a useful starting point, but it can mask some of the variation within a state. Many states have metro areas that are more expensive, but rural areas that are more affordable. Look at more specific data within a state for the most accurate numbers.

If you need help getting started, consider the metro-level tools from the Redfin housing market data center or Realtor.com housing market data to help you find information on specific cities and zip codes.

FAQs

What is the most affordable state to buy a house in 2026?

West Virginia, Mississippi, and Louisiana have the cheapest median home prices in the country, according to Zillow data. However, these numbers don’t take into account other costs of homeownership, such as property taxes. For example, Louisiana’s high homeowners insurance rates mean that other states with slightly more expensive homes could be more affordable to own homes in.

Which states offer the best housing value, not just the cheapest homes?

West Virginia, Mississippi, Kentucky, Louisiana, and Alabama have the overall best housing value. While they all have low median home prices, they also have other unique benefits that may include a low cost per square foot, low price-to-income ratio, affordable property and/or sales tax, and/or low electricity costs.

How much do property taxes affect housing affordability?

Your property tax rate can make the difference of thousands of dollars per year in additional housing costs. Consider a home valued at $300,000. In Alabama, where the effective property tax rate is 0.37%, you could expect to pay $1,100 per year. But in New Jersey, where the effective rate is 1.88%, you would pay $5,640 for the same home value. That’s a difference of more than $378 per month.

Should sales taxes be part of a housing comparison?

Sales tax affects the real cost of living in a state. You pay sales tax on your everyday purchases, as well as those directly related to your home, such as home goods and repairs. For example, when buying $10,000 of home furnishings, you would pay $0 of sales tax in Delaware, where there is no sales tax, $450 in Hawaii, where the combined sales tax rate is 4.5%, and $1,011 in Louisiana, where the rate is 10.11%.

Does cost per square foot matter when comparing states?

Cost per square foot isn’t necessarily a standalone measure of affordability, but it does tell you how much home you can get for your money. You might find that across different states with similar median housing prices, one has a much lower cost per square foot. In other words, the median housing price buys you more square footage in that state. For growing families, this could be a key factor.

Do utilities vary enough by state to affect the ranking?

The cost of utilities, especially electricity, does affect your bottom line from one state to the next, but not as much as some other factors. The difference across states could vary by hundreds of dollars per year. Hawaii is the notable exception – its average rate is likely to cost you more than $1,000 per year more than the next highest states.

That being said, utility rates can vary widely within states, so it’s best to look at local data for the most accurate numbers.

Are lower-cost states always better for retirees?

Low-cost states, including those with a low tax burden, are often beneficial for retirees who are on a fixed income. However, many retirees are also concerned about lifestyle and quality of life. 

Some people may be willing to compromise on a slightly more expensive state that better fits their lifestyle needs. Florida and Arizona are two solid examples, as they’re popular destinations for retirees to move, but aren’t among the cheapest half of states for housing costs.

Conclusion

The best housing value nationwide is located in the South and the Midwest. These states have a few things in common, including below-average housing prices and a low cost per square foot. However, home prices aren’t the only factor that matters. It’s just as important to balance your purchase price with recurring ownership costs, such as taxes, insurance, and utilities.

Whether you’re a first-time buyer or a retiree evaluating your next housing move, it’s important to fit housing into your overall financial plan. Wealth Enhancement’s financial planning services can help you connect your home purchase decision to your full financial picture. Reach out today to schedule your free consultation.

Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor and affiliate of Wealth Enhancement Group.

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