The number of renter households is growing three times faster than the number of homeowner households, and has reached a record 45.6 million, according to a report from Redfin.
Renter households rose by 2.7% year over year in the third quarter, triple the rate of homeowner households, which grew by 0.9% during the same period. Homeowner households are also at a record 86.9 million.
The third quarter’s 2.7% jump was one of the fastest rates of growth in nine years, only surpassed by this year’s first-quarter rate of 2.8%. As the cost of buying continues to rise, renter households have formed faster than homeowner households for the past four quarters.
The report found that 34.4% of U.S. households are renter households. Rents have remained nearly flat for two years due to the boom in new construction of multifamily properties. The new inventory has been sufficient to meet demand, especially in the Sun Belt states. In the past two years, an average of 647,000 apartment units have been completed each year, the fastest pace since 1994. At the same time, wages have grown by 4%, making rentals more affordable.
But now construction is slowing, with permits for new apartment properties down 16% year over year in September and down 47% from February 2023, which was the highest level of multifamily permitting in nearly 40 years.
Home prices, on the other hand, are up 6% year over year in September and more than 10% in the past two years. Redfin also reports that just 2.5% of U.S. homes changes hands in the first eight months of 2024, the lowest rate in decades.
“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 Sheharyar Bokhari Redfin senior economist. “With home prices at record highs and mortgage rates remaining elevated, renting is increasingly the only viable choice for many young people and families.”
Redfin found that California and New York City lead the nation in renters. San Jose has the highest rate of renter households among the 75 largest U.S. metropolitan areas at 52%. It was followed by Los Angeles (50.8%) and New York City (49.1%). Cities with the lowest levels of renter households were Cape Coral, FL (21.8%), Charleston, SC (23.7%) and Columbia, SC (24.5%).
