Katie Holmes is reportedly set to buy a $4 million home in New York City.

The 'Giver' actress, who has an eight-year-old daughter, Suri, with ex-husband Tom Cruise, was recently spotted viewing the lavish new abode in Midtown, as she is eager to live in a more family-friendly neighbourhood.

A source told UsMagazine.com: ''She is buying in a more neighbourhood-y area. The place has three bedrooms, and she needs to do some work to it but not much.''

The brunette beauty, who split from Tom in June 2012, is currently renting an apartment in Manhattan's trendy Chelsea area, where she pays $12,500 a month.

But the source said she decided she ''wanted more of a neighbourhood for her daughter.''

Earlier this year, the former 'Dawson's Creek' star, 35, admitted she loves living in New York and feels at home there despite being from Ohio.

She said: ''New York has been very good to both of us. I love the theatre, the galleries in my neighbourhood. Stuff [like] that is so much of what makes me love this city. I love the Knicks. I love talking to my neighbours in the elevator. I like feeling a part of something big.''

She added: ''I love the community in New York. I love New Yorkers. I ran into someone on the street the other day that I went to high school with. I love the moments of spontaneity every day.''