Renters are feeling the pain of higher costs, spending more than one-quarter, 26.4%, of their monthly budgets on average on rents in August, according to Realtor.com’s Monthly Rental Report. This is up from 25.7% of renters’ incomes a year ago.
Coastal areas topped the list of least affordable markets last month. Among the 50 largest metros, nine had a rent-to-income share higher than 30%, led by Miami, Los Angeles, San Diego, New York, and Boston.
Many markets in the middle of the country saw rents significantly more affordable compared with the national rent-to-income share. Oklahoma City topped the list, with renters spending an average 17.5% of their monthly budgets on housing costs, followed by Minneapolis with a 20.1% share, St. Louis with a 20.3% share, and Kansas City, Missouri, and Louisville, Kentucky, with 20.6% shares. However, these rental costs still account for a higher share of incomes year over year in the seven of the top 10 most affordable markets.
According to a recent survey from Avail, part of Realtor.com, over half of renters, 60%, reported that higher rents and household expenses are the biggest cause of financial strain.
“Our analysis underscores the very real rental affordability challenges that many Americans face today. Rents are significantly higher than in previous years and are taking up a substantial portion of incomes, which are growing at a slower pace than inflation,” said Realtor.com chief economist Danielle Hale. “Still, there are some bright spots for renters as of late. Based on the general rule of thumb that you should keep housing costs to under 30% of your paycheck, renters were able to follow that best practice in the majority of large metros in August.”
Hale added that as rent growth has continued to cool, national rents in August didn’t hit a new high for the first time in nine months.
“If these trends and typical seasonal cooling persist, renters may be better able to keep housing costs to a relatively manageable portion of their budgets in the months ahead,” she said.
In August, according to Realtor.com, the U.S. median rental price declined to $1,771 from $1,781 in July. Rent growth also continued to moderate on a year-over-year basis, seeing a single-digit increase after 13 straight months in double digits. However, national rents are still more than 20% higher than those in August 2020 and seen across all unit sizes, with the studio median rent up 21.2% at $1,489; one-bedrooms at a median $1,653, up 22.6%; and two-bedrooms at a median $1,964, up 23.2%.
