With the high cost of purchasing a home pricing many consumers out of the housing market, the number of renter households in the United States surged by 2.7% in the third quarter year over year. New renter households reached a record 45.6 million, according to a new report from real estate broker Redfin.
The comparison with new homeowners during that same period – only a 0.9% increase – shows that renting grew three times faster than buying in the third quarter of 2024.
As the quarter ended, the median existing-home price for all housing types was $404,500, up 3.0% from one year ago. The average mortgage rate was over 6%, reducing affordability.
The increase in renter households, amounting to 1.18 million additional households, marks the second-fastest pace since 2015, only slightly behind the first quarter's 2.8% rate. This trend has persisted over the past four quarters as the cost of purchasing a home has risen more sharply than the cost of renting.
Renters paying more
Renters are also paying more to put a roof over their heads. The median asking rent increased by 0.6% year over year in September, although rents have largely remained flat over the past two years.
In contrast, home prices climbed 6% year over year in September and have increased by more than 10% over the past two years. Coupled with a historically “normal” mortgage rate of between 6% and 7% and many homes are no longer affordable.
Only 2.5% of U.S. homes changed hands in the first eight months of 2024, marking the lowest rate in decades.
Affordable housing is becoming a political issue
"Affordable housing has been at the forefront of this election cycle because so many people are struggling to see how they will ever become homeowners—especially those from younger generations," said Redfin Senior Economist Sheharyar Bokhari.
"With home prices at record highs and mortgage rates remaining elevated, renting is increasingly the only viable choice for many young people and families. Building more homes will help address that, but we also have to recognize that Gen Z and future generations may not view homeownership as a life goal, and the rentership rate may continue to rise for years to come."
Redfin said the main reason rents have become stable is the boom in multifamily construction over the past two years. Builders added new multifamily housing units at an annual rate of 647,000 as of the third quarter, the fastest pace in records dating back to 1994.