Realtor.com® August Rental Report: Renting Beats Buying in All but Three of the Largest U.S. Metros
- The cost of buying a starter home in the top 50 metros was $1,111 (60.3%) higher than renting on average
- Rents have declined for the past four months, giving renters more time to save for a home
- Renting was more affordable than buying in 47 of the 50 largest metros in August 2023
- None
Buying a starter home in the top 50 metros cost
"Rents have registered steady declines for the past four months and, while they remain well above pre-pandemic levels, when you factor in the impact of record-high mortgage rates and high home prices, it's understandable that many would-be homebuyers are choosing to remain on the sidelines," said Danielle Hale, Chief Economist at Realtor.com®. "The downward trend in rental prices reduces the sense of urgency, giving renters more time to save for a home. In the period ahead as rents soften, we expect more households will remain renters for longer."
August 2023 Rental Metrics – National
Unit Size | Median Rent | Rent YoY | Rent Change - 4 years |
Overall | -0.6 % | 23.7 % | |
Studio | -0.2 % | 18.4 % | |
1-bed | -0.5 % | 23.6 % | |
2-bed | -0.7 % | 26.4 % |
Nationally, rents drop for fourth straight month, while homebuying costs increase
Median rents for 0-2 bedroom units declined consistently year-over-year for the past four months which, when combined with mortgage rates hovering above
- August marked the fourth month of year-over-year rent declines in a row for 0-2 bedroom properties, which overall are down -
0.6% year-over-year. Rents dropped -0.7% for 2-bedrooms, -0.5% for 1-bedrooms, and -0.2% for studios. - Specifically, the median asking rent in the 50 largest metros dipped to
$1,752 $7 $25 $336 23.7% ) higher than the same time in 2019, prior to the pandemic. - In the majority of the largest
U.S. metros, though, renting a starter home remains more affordable than buying one. During the past 12 months, with an average 30-year fixed mortgage rate jumping from5.22% to7.07% , the cost to buy a starter home in markets that favor renting climbed at an average rate of21.4% , increasing from$2,500 $2,959
Renting beats buying in nearly all major metros, and the advantage is increasing
In August, renting was more affordable than buying a starter home in 47 of the 50 largest metros, up from 45 during the same time last year. Declining rents and the increasing costs of buying a home contributed to the jump in savings from renting. While skyrocketing mortgage rates pushed up the cost of taking on a mortgage, climbing home prices expanded the base of mortgages as well, making buying even less affordable compared to renting. The advantage of renting continues to grow in all rent-favoring markets.
In the top 10 metros that favor renting over buying, most of which have a higher concentration of tech workers and high earners, both the average cost to rent and to buy are higher than the national average.
- In August 2023, the monthly savings in rent-favoring markets were
$483 - The median asking rent declined -
0.5% year-over-year in rent-favoring markets, a trend significantly different from 12 months ago. In these markets, the monthly cost of buying a starter home in August 2023 was$2,959 $1,183 64.3% higher than the cost of renting. Comparatively, in August 2022 buying a starter home in rent-favoring markets cost an additional$700 36.2% ) more than renting. San Jose saw the most substantial surge in savings when comparing renting and buying. In August 2023, renting a starter home inSan Jose yielded monthly savings of$3,214 $1,964 Indianapolis , however, saw the largest percentage increase in savings from renting. In August 2023, renting a starter home inIndianapolis would save renters$431 $43
In markets favoring buying, the advantage is shrinking
In August 2023, only three of the top 50 U.S. metros favored buying starter homes rather than renting:
- In buy-favoring markets, the monthly cost of buying a starter home was
$29 2.1% lower than the cost of renting, a significant decrease from the savings of$192 - In particular, the savings from buying a starter home instead of renting dropped from
$434 $43 Memphis ,$282 $6 Birmingham , and$139 $39 Pittsburgh over the past 12 months.
As the benefit of buying diminishes in these markets, prospective homebuyers will need to consider all trade offs when deciding whether to buy or continue renting. This is particularly important given that today's elevated mortgage rates and still-high home prices pose substantial challenges for would-be buyers. To help homebuyers better understand their options, as part of its RealCost set of tools, Realtor.com® offers a free rent or buy calculator, which estimates how long a new homebuyer would need to remain in their home for buying to make more financial sense than renting.
"As we noted in our July Rental Trends report, seasonality and recent momentum in the rental market make it very unlikely the market will see a new peak rent in 2023," said Jiayi Xu, Economist at Realtor.com®. "Still, rents remain well above pre-pandemic levels, contributing to ongoing affordability concerns for renters, regardless of whether they plan to rent or buy in the months ahead."
Top 10 Metros that Favor Renting over Buying in August 2023
Metro | Median | Monthly | $ | % | Rent | Buy Cost |
136.3 % | -8.0 % | 9.2 % | ||||
101.6 % | -4.9 % | 12.7 % | ||||
101.1 % | 2.7 % | 35.1 % | ||||
99.1 % | -3.9 % | 29.9 % | ||||
96.1 % | -2.3 % | 23.3 % | ||||
95.5 % | -0.2 % | 23.3 % | ||||
93.9 % | -5.2 % | 13.8 % | ||||
93.8 % | 3.2 % | 24.4 % | ||||
91.7 % | -3.7 % | 21.0 % | ||||
89.0 % | -4.5 % | 17.7 % |
Rental Data – 50 Largest Metropolitan Areas – August 2023
Metro | Median Rent (0-2 | YOY (0-2 |
-4.0 % | ||
-8.0 % | ||
3.2 % | ||
3.0 % | ||
3.2 % | ||
NA | NA | |
-1.9 % | ||
0.5 % | ||
6.2 % | ||
2.7 % | ||
2.7 % | ||
-5.4 % | ||
-1.0 % | ||
3.3 % | ||
NA | NA | |
1.1 % | ||
3.9 % | ||
2.2 % | ||
1.6 % | ||
-4.6 % | ||
-2.3 % | ||
4.4 % | ||
-2.5 % | ||
-0.7 % | ||
4.3 % | ||
1.4 % | ||
-0.2 % | ||
NA | NA | |
6.5 % | ||
3.4 % | ||
-4.8 % | ||
-0.1 % | ||
-4.5 % | ||
3.4 % | ||
-5.2 % | ||
NA | NA | |
-5.4 % | ||
5.9 % | ||
-4.8 % | ||
NA | NA | |
-3.9 % | ||
-2.0 % | ||
-0.2 % | ||
-4.9 % | ||
-0.2 % | ||
-3.7 % | ||
1.9 % | ||
-5.5 % | ||
1.1 % | ||
4.9 % |
Methodology
Rental data as of August for studio, 1-bedroom, or 2-bedroom units advertised as for-rent on Realtor.com®. Rental units include apartments as well as private rentals (condos, townhomes, single-family homes). We use rental sources that reliably report data each month within the top 50 largest metropolitan areas. Realtor.com® began publishing regular monthly rental trends reports in October 2020 with data history stretching back to March 2019.
The monthly cost of buying a home was calculated by averaging the median listing prices of studio, 1-bed, and 2-bed homes, weighted by the number of listings, in each housing market. Monthly buying costs assume a
With the release of its July rent report, Realtor.com® incorporated a new and improved methodology for capturing and reporting more comprehensive rental listing trends and metrics. The new methodology is expected to yield a cleaner, more representative and more consistent measurement of rental listings and trends at both the national and local level. The methodology has been adjusted to better represent the true cost of primary housing for renters. Most areas across the country will see minor changes with a smaller handful of areas seeing larger updates. As a result of these changes, the rental data released since July 2023 will not be directly comparable with previous releases and Realtor.com® economics blog posts. However, future data releases, including historical data, will consistently apply the new methodology.
About Realtor.com®
Realtor.com® is an open real estate marketplace built for everyone. Realtor.com® pioneered the world of digital real estate more than 25 years ago. Today, through its website and mobile apps, Realtor.com® is a trusted guide for consumers, empowering more people to find their way home by breaking down barriers, helping them make the right connections, and creating confidence through expert insights and guidance. For professionals, Realtor.com® is a trusted partner for business growth, offering 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: press@realtor.com
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