With the cost of buying a home rising faster than the cost of renting over the past four quarters, it’s no surprise that renter households are showing greater growth than their homeownership counterparts.
The increase in the number of renter households is outpacing the growth in the number of homeowners in the US, as there are now a record 45.6 million renters. That was an increase of 2.7% year-on-year, according to the report a new one Redfin report.
This growth rate is three times faster than the 0.9% increase in the number of homeowner households, which now totals 86.9 million. Notably, the 2.7% increase represents 1.18 million additional renter households and marks the second-fastest annual growth rate since 2015.
The average asking rent rose by 0.6% year-on-year in September, but rental prices have largely remained the same over the past two years. Rents have become more affordable as wages have increased by about 4%.
On the other hand, home prices rose 6% year over year in September and have risen more than 10% over the past two years, according to Redfin. And just 2.5% of U.S. homes changed hands in the first eight months of 2024 — the lowest level. rate in decades.
Redfin cited the multifamily construction boom in recent years as one of the reasons why rents have remained stable. The U.S. added 647,000 new multifamily units annually starting in the third quarter — the fastest pace on record dating back to 1994.
The increase in multifamily construction met demand in certain regions, especially in the Sun Belt states, but construction activity is now slowing. In September, permits for new multifamily housing fell 16% year over year and were 47% below the February 2023 peak, the highest level in nearly 40 years.
More than a third (34.4%) of US households are made up of renters – a figure that has remained stable over the past three quarters.
The share of renters is highest in expensive urban areas in California and New York City. San Jose has a rental rate of 52%, the highest among the 75 largest U.S. metro areas. It is followed by Los Angeles (50.8%), New York (49.1%), San Diego (48%) and Fresno, California (47.4%).
Rents in cheaper metros are lower. In Cape Coral, Florida, 21.8% of households are renters. It is followed by Charleston, South Carolina (23.7%), Columbia, South Carolina (24.5%), Allentown, Pennsylvania (27.2%) and Detroit (28.2%).
