Median US rental price grew 14.1% year-over-year to US$1,876 in June, 29.9% lower than monthly starter home payments; nearly 75% of the 50 largest metros favored renting, up from just under 50% in January: Realtor.com

Sample article from our Housing & Economy

SANTA CLARA, California , July 21, 2022 (press release) –

Even as the U.S. median rental price hit a new high of $1,876 in June, climbing mortgage rates drove monthly starter homeownership costs 29.9% ($561) higher than rents

New data illustrates how higher mortgage rates are increasingly tipping the housing affordability scale in favor of renting over first-time buying. Nationally, the gap between monthly starter homeownership costs1 and rents widened by 25.5 percentage points (+$483) from January to June, according to the Realtor.com® Monthly Rental Report released today. Additionally, more than three-quarters of the 50 largest U.S. metros favored renting in June, compared to just under half of these markets in January.

"With rents and for-sale home prices both hitting record-highs in June, the rising cost of financing a home purchase stands out as the clear driver of rental affordability relative to typical starter homeownership costs. In fact, our analysis shows that if not for higher mortgage rates, the rent versus first-time buying gap would have shrunk in the first half of this year, as rents grew more quickly than starter home prices," said Realtor.com® Chief Economist Danielle Hale. "While more markets offered relative rental affordability in June than in January, rents are still rising across the country. Plus, many of the areas that favored renting are among the biggest tech cities, where real estate tends to come at a premium. As housing affordability remains a challenge for many Americans, it's key to stay on top of how higher costs impact your budget, whether renting or first-time buying."

June 2022 Rental Metrics – National

Unit Size

Median Rent

Change over
June 2021

Change over
June 2020

Overall

$1,876

14.1 %

23.9 %

Studio

$1,544

15.1 %

19.3 %

1-bed

$1,738

13.8 %

22.9 %

2-bed

$2,104

13.6 %

25.6 %

 

Nationally, rents hit 16th straight record-high but lag first-time buying costs
The U.S. median rental price hit a new high for the 16th consecutive month in June, but still lagged behind typical starter homeownership costs, and by a greater amount than at the start of the year. This growth is largely attributed to the skyrocketing cost of financing a home purchase, with mortgage rates jumping more than two percentage points from January to June. Although for-sale home prices also hit multiple record-highs in the first half of the year, Realtor.com®'s June analysis found that mortgage rate hikes were the biggest driver of the widening affordability gap between renting and first-time buying.

In June, the U.S. median rental price hit a new high of $1,876, rising 14.1% year-over-year in the fifth consecutive month of moderation from January's peak (+17.3%). However, overall rents remained 27.6% higher than in 2020 and all unit sizes posted double-digit annual gains: Studios, up 15.1%; one-bedrooms, up 13.8%; and two-bedrooms, up 13.6%.
Nationally, monthly starter homeownership costs were an average of 29.9% ($561) higher than rents in June, up from 4.4% ($78) in January. In 2021, the monthly cost to buy was $1,815, just $171 higher than rents nationwide.
Higher mortgage rates were the biggest driver of the widening year-over-year gap between first-time buying and renting, adding $416 to typical monthly starter home costs in June. Comparatively, national starter home listing price growth (+10.4% year-over-year to a median of $332,619) has only added $162 to first-time buying costs since June 2021, while rent increases shrunk the gap by $232.
In the largest metros, affordability increasingly favors renting over first-time buying
In June, a significantly greater share of the 50 largest U.S. metros favored renting over buying than at the start of the year. Among key factors driving this shift were trends seen nationwide, such as higher mortgage rates and cooling rent growth. June data also points to a correlation with economic indicators like inflation and unemployment, which were relatively lower in many of the metros with smaller gaps between monthly rents and first-time buying costs. Additionally, the top rent-favoring markets were dominated by the country's biggest tech hubs, while the metros that favored starter homeownership were concentrated in the midwest and south.

Of the 50 largest U.S. metros, 38 offered lower rents than monthly starter homeownership costs in June, compared to 24 markets in January.
The country's biggest tech cities accounted for eight of June's top 10 metros that favored renting over buying, led by Austin, Texas where the monthly starter homeownership cost was 97.8% ($1,822) higher than the median rental price. In all of the top 10, renting was at least 52% more affordable than first-time buying (see table below).
Eleven metros favored first-time buying over renting in June (see table below), including just one metro that flipped from favoring renting in January: Cincinnati, with monthly starter home costs that were 0.9 percentage points lower (-$14) than rents in June.
"Whether you're looking for a rental or trying to buy your first home, our analysis highlights the importance of prioritization when deciding where to live," said Joel Berner, Senior Economic Research Analyst for Realtor.com®. "Take the example of areas with smaller gaps between rents and monthly starter homeownership costs, which may still offer relatively affordable starter homeownership costs. Many of these metros are also attracting home shoppers from out-of-state, in turn driving up the overall cost of living. For first-time buyers prioritizing lower home prices, you may still find options in these areas, but make sure to account for higher costs of other expenses in your budget."

June 2022 Rental Metrics – Top Metros by Affordability of Renting vs. Starter Homeownership

Top 10 Metros Favoring Renting

 

Top 10 Metros Favoring Starter Homeownership

Metro Area

Monthly Cost
Difference, Buy-Rent

 

Metro Area

Monthly Cost

Difference, Buy-Rent

Austin, Texas

97.8 %($1,822)

 

Pittsburgh, Penn.

-33.0% (-$522)

San Francisco, Calif.

79.9 %($2,535)

 

Birmingham, Ala.

-29.5% (-$377)

Seattle, Wash.

78.3 %($1,801)

 

St. Louis, Mo.

-20.7% (-$284)

New York, N.Y.

70.0 %($2,092)

 

Cleveland, Ohio

-13.8% (-$198)

San Jose, Calif.

65.4 %($2,175)

 

Baltimore, Md.

-9.0% (-$164)

Portland, Ore.

61.6 %($1,128)

 

Louisville, Ky.

-5.0% (-$63)

Los Angeles, Calif.

60.5 %($1,846)

 

Virginia Beach, Va.

-3.5% (-$55)

Boston, Mass.

57.3 %($1,698)

 

Indianapolis, Ind.

-2.8% (-$36)

Houston, Texas

53.3 %($773)

 

Cincinnati, Ohio

-0.9% (-$14)

Phoenix, Ariz.

52.2 %($929)

 

Kansas City, Mo.

-0.9% (-$12)

 

June 2022 Rental Metrics – 50 Largest U.S. Metro Areas

Metro Area

Overall Median Rent

Overall Rent YoY

Studio Median Rent

Studio Rent YoY

1-br Median Rent

1-br Rent YoY

2-br Median Rent

2-br Rent YoY

% Difference (Buy-Rent)

$ Difference (Buy-Rent)

Atlanta-Sandy Springs-Roswell, Ga.

$1,858

10.8 %

$1,718

14.6 %

$1,731

11.4 %

$2,065

9.4 %

13.1 %

$243

Austin-Round Rock, Texas

$1,864

19.6 %

$1,534

22.8 %

$1,720

23.5 %

$2,050

17.0 %

97.8 %

$1,822

Baltimore-Columbia-Towson, Md.

$1,820

9.6 %

$1,451

2.6 %

$1,716

9.2 %

$1,940

10.2 %

-9.0 %

-$164

Birmingham-Hoover, Ala.

$1,278

9.8 %

$982

-3.8 %

$1,186

8.5 %

$1,343

11.5 %

-29.5 %

-$377

Boston-Cambridge-Newton, Mass.-N.H.

$2,966

23.6 %

$2,499

24.3 %

$2,757

19.9 %

$3,305

25.6 %

57.3 %

$1,698

Buffalo-Cheektowaga-Niagara Falls, N.Y.

$1,345

10.0 %

$1,125

2.7 %

$1,195

8.7 %

$1,495

8.9 %

25.1 %

$337

Charlotte-Concord-Gastonia, N.C.-S.C.

$1,752

18.4 %

$1,619

20.9 %

$1,659

19.4 %

$1,880

12.1 %

1.3 %

$23

Chicago-Naperville-Elgin, Ill.-Ind.-Wis.

$2,000

14.3 %

$1,700

25.9 %

$1,960

15.3 %

$2,200

12.5 %

21.4 %

$428

Cincinnati, Ohio-Ky.-Ind.

$1,499

9.1 %

$1,200

10.6 %

$1,438

9.3 %

$1,626

5.8 %

-0.9 %

-$14

Cleveland-Elyria, Ohio

$1,432

12.1 %

$948

6.8 %

$1,317

8.6 %

$1,593

16.5 %

-13.8 %

-$198

Columbus, Ohio

$1,310

11.2 %

$1,089

10.6 %

$1,235

11.5 %

$1,412

10.8 %

37.3 %

$489

Dallas-Fort Worth-Arlington, Texas

$1,702

17.7 %

$1,449

18.0 %

$1,567

19.1 %

$1,988

16.0 %

48.3 %

$822

Denver-Aurora-Lakewood, Colo.

$2,032

10.2 %

$1,666

9.1 %

$1,900

10.8 %

$2,394

10.7 %

50.4 %

$1,025

Detroit-Warren-Dearborn, Mich.

$1,445

9.6 %

$1,107

11.3 %

$1,195

6.0 %

$1,600

9.3 %

2.0 %

$29

Hartford-West Hartford-East Hartford, Conn.

$1,755

11.3 %

$1,469

26.9 %

$1,606

8.2 %

$2,063

11.8 %

15.0 %

$262

Houston-The Woodlands-Sugar Land, Texas

$1,450

10.2 %

$1,356

6.7 %

$1,333

10.5 %

$1,627

8.5 %

53.3 %

$773

Indianapolis-Carmel-Anderson, Ind.

$1,303

10.9 %

$1,059

9.2 %

$1,207

14.0 %

$1,445

10.5 %

-2.8 %

-$36

Jacksonville, Fla.

$1,647

17.8 %

$1,192

25.5 %

$1,537

16.7 %

$1,809

17.3 %

22.3 %

$368

Kansas City, Mo.-Kan.

$1,326

10.2 %

$1,024

3.8 %

$1,252

14.3 %

$1,533

11.2 %

-0.9 %

-$12

Las Vegas-Henderson-Paradise, Nev.

$1,650

14.7 %

$1,295

18.3 %

$1,514

14.0 %

$1,760

11.8 %

38.7 %

$639

Los Angeles-Long Beach-Anaheim, Calif.

$3,051

14.1 %

$2,329

17.2 %

$2,798

16.2 %

$3,505

14.1 %

60.5 %

$1,846

Louisville/Jefferson County, Ky.-Ind.

$1,253

13.9 %

$1,046

15.6 %

$1,148

10.1 %

$1,420

12.1 %

-5.0 %

-$63

Memphis, Tenn.-Miss.-Ark.

$1,408

12.2 %

$1,149

10.0 %

$1,368

12.4 %

$1,552

12.5 %

N/A*

Miami-Fort Lauderdale-West Palm Beach, Fla.

$2,850

37.4 %

$2,499

38.8 %

$2,494

31.7 %

$3,245

37.5 %

16.6 %

$473

Milwaukee-Waukesha-West Allis, Wis.

$1,580

10.9 %

$1,230

7.0 %

$1,470

8.9 %

$1,798

9.1 %

44.2 %

$699

Minneapolis-St. Paul-Bloomington, Minn.-Wis.

$1,597

3.3 %

$1,250

3.7 %

$1,502

2.8 %

$1,943

2.1 %

40.9 %

$653

Nashville-Davidson--Murfreesboro--Franklin, Tenn.

$1,780

18.4 %

$1,665

6.0 %

$1,650

17.1 %

$1,909

21.1 %

30.6 %

$545

New Orleans-Metairie, La.

$1,765

6.6 %

$1,400

25.7 %

$1,640

9.3 %

$2,063

8.6 %

31.5 %

$555

New York-Newark-Jersey City, N.Y.-N.J.-Pa.

$2,989

21.1 %

$2,700

34.8 %

$2,693

18.1 %

$3,365

18.1 %

70.0 %

$2,092

Oklahoma City, Okla.

$1,033

14.1 %

$958

35.1 %

$933

9.9 %

$1,140

15.7 %

15.8 %

$163

Orlando-Kissimmee-Sanford, Fla.

$1,979

23.9 %

$1,721

22.4 %

$1,833

23.4 %

$2,246

25.9 %

-0.6 %

-$12

Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md.

$1,811

6.8 %

$1,535

7.9 %

$1,748

5.9 %

$1,995

5.0 %

15.0 %

$271

Phoenix-Mesa-Scottsdale, Ariz.

$1,781

11.1 %

$1,441

12.9 %

$1,629

10.9 %

$1,950

8.6 %

52.2 %

$929

Pittsburgh, Pa.

$1,583

9.4 %

$1,294

7.8 %

$1,570

9.4 %

$1,742

8.0 %

-33.0 %

-$522

Portland-Vancouver-Hillsboro, Ore.-Wash.

$1,833

10.5 %

$1,456

3.1 %

$1,789

10.3 %

$2,197

9.4 %

61.6 %

$1,128

Providence-Warwick, R.I.-Mass.

$2,200

23.8 %

$1,759

11.0 %

$1,908

22.5 %

$2,500

26.7 %

18.9 %

$417

Raleigh, N.C.

$1,675

16.7 %

$1,531

20.4 %

$1,562

19.1 %

$1,894

16.8 %

29.1 %

$487

Richmond, Va.

$1,465

13.4 %

$1,188

16.1 %

$1,334

13.8 %

$1,586

14.1 %

25.9 %

$380

Riverside-San Bernardino-Ontario, Calif.

$2,622

7.2 %

$1,840

24.3 %

$2,203

6.4 %

$2,850

6.7 %

6.3 %

$165

Rochester, N.Y.

$1,362

8.4 %

$1,000

12.0 %

$1,318

14.6 %

$1,498

11.2 %

19.5 %

$265

Sacramento--Roseville--Arden-Arcade, Calif.

$2,102

7.3 %

$1,861

3.7 %

$1,993

5.6 %

$2,285

7.1 %

46.7 %

$981

San Antonio-New Braunfels, Texas

$1,413

16.7 %

$1,273

14.8 %

$1,296

18.3 %

$1,621

16.5 %

46.6 %

$658

San Diego-Carlsbad, Calif.

$3,182

19.1 %

$2,485

17.9 %

$2,943

23.2 %

$3,558

19.4 %

39.0 %

$1,241

San Francisco-Oakland-Hayward, Calif.

$3,171

12.6 %

$2,541

15.0 %

$2,914

11.7 %

$3,626

9.7 %

79.9 %

$2,535

San Jose-Sunnyvale-Santa Clara, Calif.

$3,324

18.5 %

$2,529

12.7 %

$3,104

18.9 %

$3,735

18.5 %

65.4 %

$2,175

Seattle-Tacoma-Bellevue, Wash.

$2,299

15.7 %

$1,892

18.1 %

$2,270

13.3 %

$2,731

14.6 %

78.3 %

$1,801

St. Louis, Mo.-Ill.

$1,371

7.5 %

$998

7.0 %

$1,292

7.7 %

$1,500

7.0 %

-20.7 %

-$284

Tampa-St. Petersburg-Clearwater, Fla.

$2,109

16.5 %

$2,020

20.2 %

$1,899

16.4 %

$2,318

17.0 %

2.6 %

$55

Virginia Beach-Norfolk-Newport News, Va.-N.C.

$1,581

11.7 %

$1,372

12.5 %

$1,493

11.1 %

$1,721

9.2 %

-3.5 %

-$55

Washington-Arlington-Alexandria, DC-Va.-Md.-W. Va.

$2,198

11.5 %

$1,757

9.9 %

$2,082

11.6 %

$2,610

10.1 %

38.7 %

$850

*Memphis excluded from the Rent vs. Buy analysis due to data irregularities.

Methodology
Rental data as of June 2022 for units advertised as for-rent on Realtor.com®. Rental units include apartment communities as well as private rentals (condos, townhomes, single-family homes). All units were studio, 1-bedroom, or 2-bedroom units. National rents were calculated by averaging the medians of the 50 largest U.S. metropolitan areas, defined by the Core-Based Statistical Area (CBSA). Realtor.com® began publishing regular monthly rental trends reports in October 2020 with data history going back to March 2019.

Note: With the release of its May 2022 Rental Report, Realtor.com® incorporated a new and improved methodology (see details here). As a result of these changes, the rental data released since May 2022 will not be directly comparable with prior publications and downloaded files. However, future releases, including historical data, will consistently apply the new methodology.

Rent vs. Buy Analysis: Subtracts median rents from monthly starter homeownership costs, defined as: listing prices of for-sale homes  with 0- to 2-bedrooms; a 7% down payment; June's  average Freddie Mac 30-year fixed mortgage rate; HOA fees, taxes, and homeowner's insurance.

About Realtor.com®
Realtor.com® makes buying, selling, renting and living in homes easier and more rewarding for everyone. Realtor.com® pioneered the world of digital real estate more than 25 years ago, and today through its website and mobile apps offers a marketplace where people can learn about their options, trust in the transparency of information provided to them, and get services and resources that are personalized to their needs. Using proprietary data science and machine learning technology, Realtor.com® pairs buyers and sellers with local agents in their market, helping take the guesswork out of buying and selling a home. For professionals, Realtor.com® is a trusted provider of consumer connections and branding solutions that help them succeed in today's on-demand world. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. For more information, visit Realtor.com®.

Media Contact
rachel.conner@move.com 

1 See methodology below for a detailed breakdown of monthly starter home buying costs.

 

SOURCE Realtor.com

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