Key Details:
- Redfin’s latest analysis reveals record growth in renter households, up 2.7% year over year, growing three times faster than homeowner households as rising home prices and high mortgage rates push more Americans toward renting.
- Multifamily construction hit a record pace, helping stabilize rent, with 647,000 units added annually as of Q3 2024, though affordability challenges remain.
- Regional trends highlight cities like San Jose and New York, where renting continues to dominate.
Renter households grew three times faster than homeowner households in the third quarter of 2024.
That’s according to a new Redfin report, which also highlights the record pace of new multifamily construction, with 647,000 new units added annually as of Q3 2024. That growth is helping to stabilize rent—more in some metros than others.
As potential buyers contend with high home prices and elevated mortgage rates, renting has become the only affordable option for many of them. And even with the all-time high in multifamily construction, supply is having a tough time keeping up with demand—especially in costly metros where renter households are climbing faster than the national average.
Byron Lazine reviewed this report on Thursday’s Hot Sheet, tying it to the enthusiasm some of the youngest potential buyers are feeling in regards to Wednesday’s election results.
Let’s dive in.
Record Highs in Renter and Homeowner Households
According to Redfin’s data on Q3 2024, the number of renter households nationwide grew 2.7% year over year, totaling a record 45.6 million. That 1.8 million growth rate increase is the second-fastest since 2015—just behind Q1 2024’s 2.8% surge.
Meanwhile, the number of homeowner households grew by 0.9% year over year in quarter three, hitting a record high of 86.9 million.
Renter households have grown faster than homeowner households for four quarters straight, primarily due to the higher costs of buying a home compared to renting.
Rising Costs and Affordability Challenges
In September, the U.S. median asking rent increased modestly by 0.6% year over year, stabilizing as wages increased by around 4%. Meanwhile, home prices rose by 6% year over year over the same period, putting homeownership further out of reach for many.
Affordability issues have slowed the rate of U.S. home sales to just 2.5% of homes changing hands in the first eight months of 2024—the lowest rate in decades.
As suggested by Redfin Senior Economist Sheharyar Bokhari, the comparative affordability of renting could cement its status as the primary housing choice for Gen Z and younger generations. But that won’t stop younger generations from wanting to buy a home when the opportunity presents itself.
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. 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.
Multifamily Construction Boom and Rentership by Region
In response to heightened rental demand, multifamily housing completions hit a record annual pace in Q3 with the addition of 647,000 new units. This trend has helped stabilize rent growth but is currently slowing, with permits down 16% year over year.
Rentership rates vary by region, too, with the highest rates in metros with the priciest housing markets, led by San Jose (52%), Los Angeles (50.8%), and New York City (49.1%).
Meanwhile, cities with more affordable housing markets—led by Cape Coral, FL (21.8%) and Charleston, SC (23.7%)—had the lowest rentership rates.
Read the full report for more information, including metro-level data and methodology.
