The number of renter households in the third quarter totaled a record 45.6 million, a 2.7% year-over-year increase, according to new data report from Redfin (NASDAQ: RDFN). This growth rate is three times faster than the 0.9% increase in homeowner households, which now total a record 86.9 million.
Redfin noted the 2.7% increase, which represented 1.18 million additional renter households, the second fastest pace since 2015, only trailing the 2.8% rate from the first quarter of this year. This was attributed to renter households forming faster than homeowner households for the past four quarters while new multifamily units are being completed at a record pace.
Furthermore, the cost of buying a home was greater than the cost of renting. The median asking rent was up 0.6% year-over-year in September, rents have remained largely flat for the past two years and became more affordable as wages grew at around 4%. Meanwhile home prices were up 6% year-over-year in September and have grown more than 10% in the past two years while housing affordability declined.
“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.”
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