(NewsNation) — Renting is now cheaper than buying a home in all of America’s largest metropolitan areas, according to a new Realtor.com report.
In February, the monthly cost of buying a starter home was $1,027 (60%) higher than the cost of renting in the top 50 U.S. metros, Realtor.com found.
A year earlier, renting was cheaper in 90% of metro areas, but over the past twelve months, lower rents and a tight housing market have pushed that to 100%.
“With rents continuing to fall and the cost of buying a home remaining high, exacerbated by the rise in mortgage rates in the later half of 2023, renting a home is now a more cost-effective option in all major U.S. markets,” Danielle Hale, chief economist at Realtor.com, said in a statement.
The gap between renting and buying was most significant in Austin-Round Rock, Texas, where the monthly cost of buying ($3,695) is 140% higher than the median rent ($1,530).
Across California, the cost advantages of renting are also pronounced. In the San Francisco Bay Area and Los Angeles, renters save more than $2,500 per month on average compared to buyers, according to the report.
The new findings come as potential homebuyers continue to face a trifecta of pain: elevated mortgage rates, low inventory and higher prices.
For renters, the outlook has improved slightly in recent months.
February marked the seventh consecutive month of year-over-year rent declines after the median asking rent in the 50 largest metros decreased to $1,708. That’s a $50 improvement (-2.8%) from the August 2022 peak but still considerably more than before the pandemic in Feb. 2020, when the median rent was $1,456 per month, according to Realtor.com.
The real estate listings company tracks how rent prices change each month by analyzing studio, 1-bedroom, or 2-bedroom units advertised on Realtor.com.
The website calculates the monthly cost of buying a starter home by averaging the median listing prices of studio, 1-bed, and 2-bed homes, weighted by the number of listings, in each housing market. The February analysis also assumed an 8% down payment with a 6.78% mortgage rate and included other fees.
The top 10 metros with the largest rent versus buy savings:
- Austin-Round Rock-Georgetown, Texas – $2,165 monthly rent savings (142% difference)
- Seattle-Tacoma-Bellevue, Wash. – $2,422 (121%)
- Phoenix-Mesa-Chandler, Ariz. – $1,528 (99%)
- San Francisco-Oakland-Berkeley, Calif. – $2,689 (96%)
- Los Angeles-Long Beach-Anaheim, Calif. – $2,539 (90%)
- San Jose-Sunnyvale-Santa Clara, Calif. – $2,780 (87%)
- Nashville-Davidson-Murfreesboro-Franklin, Tenn. – $1,366 (86%)
- Portland-Vancouver-Hillsboro, Ore. Wash. – $1,396 (84%)
- Sacramento-Roseville-Folsom, Calif. – $1,514 (82%)
- Houston-The Woodlands-Sugar Land, Texas – $1,103 (80%)