Due to rising mortgage rates and falling rents, it’s cheaper to rent than buy a starter home in every one of the country’s 50 largest metropolitan areas, according to new data from Realtor.com published Monday.
February marked the seventh consecutive decline in rental prices for apartments and small homes, with rents falling by about 0.4 percent compared to a year before. That compared to a rise in prices for buying starter homes, on average $1,000, or 60 percent, higher than rents.
The difference was felt most in the country’s fastest growing cities. It was more than twice as expensive to buy a starter home than rent in Austin and Seattle, and nearly twice as much in Phoenix and San Francisco.
In the Austin area, rents average $1,530, while buying a similar home would cost about $3,695 per month, given average mortgage rates. Rents fell by a massive 4.4 percent in Austin last year, one of the fastest rates of any major city as its housing market booms.
Compared to 2023, the disparity increased the most in Los Angeles, Nashville, Phoenix, Memphis and Raleigh, N.C. In Richmond, Va., renters save $700 more than a year prior over buyers.
Mortgage rates have risen to nearly 7 percent in parts of the country as high Federal Reserve interest rates remain steady.