Renting Now Beats Buying in All of the Largest U.S. Metros

SANTA CLARA, CA—Elevated mortgage interest rates, still-high home prices and falling rents have made it more affordable to rent than buy in all of the top 50 U.S. metros, according to the Realtor.com Rental Report released on March 26.

In February, the mortgage payment on a starter home in the largest metros cost $1,027 (+60.1%) more than the monthly rent in those markets, on average. At the same time last year, 45 metros favored renting.

The top 10 metros with the largest rent versus buy savings (see below for top 50 metros):

1. Austin-Round Rock-Georgetown, TX – $2,165 monthly rent savings (141.5% difference)

2. Seattle-Tacoma-Bellevue, WA. – $2,422 (121.1%)

3. Phoenix-Mesa-Chandler, AZ – $1,528 (99.0%)

4. San Francisco-Oakland-Berkeley, CA – $2,689 (95.5%)

5. Los Angeles-Long Beach-Anaheim, CA – $2,539 (89.7%)

6. San Jose-Sunnyvale-Santa Clara, CA – $2,780 (86.7%)

7. Nashville-Davidson-Murfreesboro-Franklin, TN – $1,366 (86.0%)

8. Portland-Vancouver-Hillsboro, OR, WA– $1,396 (84.4%)

9. Sacramento-Roseville-Folsom, CA – $1,514 (82.1%)

10. Houston-The Woodlands-Sugar Land, TX– $1,103 (80.0%)

According to the Realtor.com report, the New York-Newark-Jersey City, NY-NJ-PA market posted a median rent of $2,852 in February, as compared to the Monthly Buy Cost of $4,995, for a savings of $2,143 and a 75% cost difference.

"With rents continuing to fall and the cost of buying a home remaining high, exacerbated by the rise in mortgage rates in the latter half of 2023, renting a home is now a more cost-effective option in all major U.S. markets," said Danielle Hale, Chief Economist at Realtor.com. "Deciding whether to rent or buy often goes beyond a financial advantage though, and likely depends on a consumer's circumstances.

Renters often prize flexibility while the biggest reasons homebuyers cite are that they want a place of their own and to be closer to family and friends. The financial scales have tipped monthly costs in favor of renting over buying, but it does not bring the benefit of housing wealth gains over time that owning does and movers should consider their long-term housing plans and personal situation as they make this decision."

The Overall Advantage of Renting Continues to Grow in Most Markets

In February, the cost of buying a starter home in the top 50 metros was $1,027 (60.1%) higher than renting one; comparatively, the cost to buy was $865 higher than renting in February 2023—a $162 higher monthly savings from renting compared to the prior year. The savings are mostly driven by declining rent prices and higher buying costs, especially interest rates—the 30-year fixed mortgage rate remained elevated at 6.78% in February 2024 compared to 6.26% 12 months ago.

The advantages of renting have become more pronounced across the top metros. Looking specifically at the top 10 metros that favor renting over buying, the average monthly costs for buying a starter home were $1,950 (95.6%) higher than rents—nearly double the cost. Those metros are mostly markets with a higher concentration of tech workers and high earners, where both the average rent and buy costs are higher than the national average.

Renting Beats Buying in All Major Metros

In February, median rents fell across all unit sizes. Despite seven months of annual rent declines, median rents are still $252 (17.3%) higher than the same time in 2020, before the onset of the pandemic. Last February, 45 metros favored renting, but over the past 12 months Memphis, TN, Birmingham, AL, Pittsburgh, PA, St. Louis, MO and Baltimore, MD metros flipped from favoring buying to favoring renting. Four out of five of those markets were among the top markets seeing a high share of investor activity, which may have accelerated the growth of home prices there and increased the overall costs of buying a home, tilting those markets further toward favoring renting over buying.

Austin, TX, where the monthly cost of buying a starter home was $3,695—141.5% more than the monthly rent of $1,530, for a monthly savings of $2,165—topped the list of markets most favoring renting. Other top markets favoring renting over buying were Seattle, Phoenix, San Francisco and Los Angeles. Metros with diminishing rental advantages were San Jose, CA, Dallas; San Francisco; Columbus, OH; Miami; and Minneapolis.

Methodology

Rental data as of February 2024 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). The study used 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 an 8% down payment, with a mortgage rate of 6.78%, and include taxes, insurance and HOA fees.