With housing affordability slipping in many areas across the nation, first-time buyers are struggling to find a home that fits their budget. U.S. home prices hit rock bottom in 2012 but then skyrocketed over the next couple of years before finally plateauing in 2014. Then, after a small decline over the summer, they shot up by 6.3% this September, showing yet another upward trend.

While this is good news for homeowners in the hottest markets, rising prices are frustrating buyers hunting for a home in these areas. Perhaps this is why so many first-time buyers are shying away from purchasing a home right now. In fact, Campbell/Inside Mortgage Finance reports that first-time home buyers have decreased from a high of 40% in May to just 34.8% in September – the lowest level recorded since April 2014.

As Prices Soar, Housing Affordability Plummets

According to the National Association of Realtors, the median sales price for a single-family home sold in June 2016 was $249,800, an extraordinary 5% increase from a year ago. To make matters worse, there simply aren’t enough homes to meet demand in many housing markets. It all comes together to create a significant drop in housing affordability.

The National Association of Realtors reports that housing affordability across the nation slipped significantly in June, pushing the affordability index from 154.8 to 153.3. (The housing affordability index measures whether or not a typical family earns enough income to qualify for a mortgage loan based on the most recent price and income data; it is higher when homes are more affordable.) Thanks to the combination of decreasing incomes, rising home prices and limited inventory, housing affordability has dropped below average in half of the top 20 U.S. metropolitan markets, including Denver; Houston; Austin, Texas; and Nashville, Tenn.

So what should you do if you’re planning to buy a home in one of these pricey markets? Here are a few suggestions.

Keep Renting

If current prices are too high to fit your budget, one of the smartest things you can do is to rent. Purchasing a home is a long-term financial commitment, one that sends many buyers deep into debt. Not only do you have to make a down payment and pay your monthly mortgage; there are additional fees, from closing costs to agent fees to property taxes. On the other hand, if you choose to rent for now, you can sock away those extra dollars and continue to save for a down payment when you do buy a home. Which brings us to our next point…

Start Saving

If you’re looking to purchase a home in a market with low housing affordability, it’s extremely important to save up for a sizeable down payment. In fact, regardless of the market, real estate experts suggest that you save up for at least a 20% down payment before you purchase any home. Why? Because if you can’t afford to cough up at least 20% up front, most lenders will force you to pay for private mortgage insurance, which will boost your monthly mortgage payment even higher. (For more, see Private Mortgage Insurance: Avoid It for These 6 Reasons.)

Ease on Down the Road

If you aren’t tied down to a specific region, you consider purchasing a home in a more affordable market. Of course, this isn’t an option for many buyers, particularly if your job is located in an expensive city. However, you could consider looking at areas within commuting distance of the city where you work. There are plenty of suburbs and regions across the nation that offer much-more-affordable home prices.

For instance, let’s say you want to purchase a home near Chicago, where the median price of a single-family dwelling is $252,000. Just 35 miles south, in Park Forest, Ill., the average cost of a four-bedroom, two-bathroom house is only $78,392. In Houston the median home price recently reached an all-time high of $230,000, yet less than 25 miles south, in Pearland, Texas, the median home price is just $179,400.

The Bottom Line

Although housing affordability is slipping in many markets across the nation, this doesn’t mean that first-time buyers will never be able to purchase a home. If you dream of owning but can’t quite afford to in your pricey market, you do have options – whether you choose to keep renting and save up for a hefty down payment or buy a home in a more affordable area.  (For more, see First-Time Home Buyer’s Guide.)