Surging home prices lead more Americans to stay in the renter pool

As the cost of buying a home has risen faster than the cost of renting for the past four quarters, it’s no surprise that renter households are witnessing more growth than their owner-occupied counterparts.

The surge in renter households is outpacing the growth of homeowners in the U.S., as there are now a record 45.6 million renters. That was up 2.7% year over year, according to a new Redfin report.

This rate of growth is three times faster than the 0.9% increase in homeowner households, which now total 86.9 million. Notably, the 2.7% increase represents 1.18 million additional renter households and marks the second-fastest yearly pace of growth since 2015.

The median asking rent was up 0.6% year over year in September, but rents have remained mostly flat for the past two years. Rents have become more affordable as wages have gone up by about 4%.

On the other hand, home prices climbed 6% year over year in September and have jumped more than 10% in the past two years, according to Redfin And only 2.5% of U.S. homes changed hands in the first eight months of 2024 — the lowest rate in decades.

Redfin cited the boom in multifamily construction over the past few years as one reason why rents have remained stable. The U.S. added new multifamily units at an annual rate of 647,000 as of the third quarter — the fastest pace on record dating back to 1994.

The surge in multifamily construction addressed demand in certain regions, particularly in the Sun Belt states, but builders are now slowing down. In September, permits for new multifamily units fell 16% year over year and were 47% below the peak reached in February 2023, which was the highest level in nearly 40 years.

More than one-third (34.4%) of households in the U.S. are renter households — a figure that has remained flat for the past three quarters.

The rentership share is highest in expensive metro areas in California and New York City. San Jose has a rentership rate of 52%, the highest among the 75 largest U.S. metros. It’s followed by Los Angeles (50.8%), New York (49.1%), San Diego (48%), and Fresno, California (47.4%).

Rentership rates in more affordable 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%).