(NASDAQ: RDFN) — The number of renter households in the U.S. increased 2.7% year-over-year in Q3, reaching a record high of 45.6 million, according to a new report from Redfin (redfin.com), the tech-driven real estate brokerage. This rate is three times faster than the 0.9% growth in homeowner households, which now total 86.9 million.
The 2.7% rise in renter households—adding 1.18 million—marks the second-highest growth rate since 2015, just behind the 2.8% increase in Q1 of this year. Renter households have outpaced the formation of homeowner households for the past four quarters, as rising home prices continue to outstrip rental costs.
While the median asking rent edged up 0.6% year-over-year in September, rental prices have largely stabilized over the past two years, supported by wage growth of around 4%. Conversely, home prices climbed by 6% in September and have surged over 10% in the last two years. This growing gap underscores affordability challenges for potential buyers, with only 2.5% of U.S. homes selling in the first eight months of 2024, the lowest turnover 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 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.”
Multifamily Construction Boom Stabilizes Rent Prices
A surge in multifamily construction over the last two years has also helped keep rental prices steady, making renting a more attractive option. The country is currently adding multifamily housing units at an annual pace of 647,000, the fastest rate on record since 1994. However, builders are now scaling back; multifamily housing permits dropped 16% year-over-year in September and are down 47% from their post-pandemic peak in February 2023.
High Rentership Rates in California and New York City
Nationwide, renter households make up just over one-third (34.4%) of all U.S. households, a figure that has held steady for the past three quarters. California and New York City have the highest renter shares due to higher home prices. San Jose, CA, leads with a rentership rate of 52% among the 75 largest U.S. metros, followed by Los Angeles (50.8%), New York (49.1%), San Diego (48%), and Fresno, CA (47.4%).
In contrast, markets with more affordable housing, such as Cape Coral, FL, have much lower rentership rates, with only 21.8% of households renting. Other metros with low renter shares include Charleston, SC (23.7%), Columbia, SC (24.5%), Allentown, PA (27.2%), and Detroit (28.2%).
