Rents Hit Record High, But Remain Cheaper Than Buying in Most Cities
July 22, 2022
Rents continued to rise in June, setting another record high, but with climbing mortgage rates making homeownership more expensive, renting remains a better deal in most of the country.
The national median rent climbed to a new record high of $1,876 a month, up 14% from a year ago, according to Realtor.com’s rental report. That marks the 16th straight month of record highs, but it is the fifth straight month of rent increases decelerating, slowing consistently from a 17% year-over-year rent increase in January.
June’s median rent was $561 a month less, or roughly 30% lower, than the typical monthly payment on a starter home, according to the report. In January, when mortgage rates were much lower, the gap between the average rent and a median home payment was just $78.
However, since the year started, mortgage rates have nearly doubled, jumping from 3.22% at the start of the year to nearly 6% in recent weeks. Higher mortgage rates have added about $416 to the monthly payment for a typical starter home in June as compared to a year earlier, according to the report.
Although home prices have also historic growth in the first half of the year, Realtor.com’s analysis found that mortgage rate hikes were the biggest driver of the widening affordability gap between renting and first-time buying.
The report found that in more than three-fourths of the top 50 cities in the U.S., renting was cheaper than owning.