For many Americans, renting has long been the more affordable option compared to buying a home—but that gap may be starting to close. A new analysis from Realtor.com finds that in several parts of the country, the financial edge of renting over owning is beginning to fade.
“Renters eyeing homeownership will want to pay close attention in the months ahead,” said Realtor’s chief economist Danielle Hale. “The narrowing rent gap we’re seeing in most cities is a signal that the affordability landscape is starting to shift.”.
Renting remains more affordable than buying in 49 out of 50 metros. The sole exception is Pittsburgh.
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For example, Austin offers tenants the highest monthly savings compared to buying, which would cost a purchaser 114.7% more a month. Nevertheless, the average monthly savings for renters are much less than they were a year ago, having dropped from $956 to $908 – “a sign that buying costs are inching closer.”
Other cities where the differential has slipped in dollar value, though not necessarily to the point where it makes buying feasible for median-income families, include San Jose, Austin, Dallas-Fort Worth, Seattle and Columbus, OH.
In other metros, however, the savings benefits of renting have risen significantly in the past year. Examples include Birmingham. Milwaukee, Memphis, Oklahoma City and Baltimore. The inclusion of Memphis in this list is noteworthy because it has switched within the year from favoring buying to favoring renting. “This underscores just how quickly local markets can turn,” the report noted.
Median asking rents are down $36 (2.1%) nationwide among the 50 largest metros. That is $48 – just 2.7% -- below the high point reached in August 2022. All size units were affected by the slump: studios fell 2.3%, one-bedrooms 2.6% and two bedrooms 2.1%. The median asking rent for 0-2 bedrooms dropped to $1,711. Compared to pre-pandemic levels, rents are up by $268 (18.6%) compared with June 2019.
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