Rent is falling in the U.S. making it cheaper than buying a house in an environment of high interest rates.
It is likely to cost you less a month to rent a home in America right now than buying one, realtor.com chief economist Danielle Hale said, as mortgage rates, which have soared to their highest level since the turn of the century, have made owning property beyond the reach of most Americans.
The median rent in America’s 50 largest metropolitan areas costs about $1750, which is down nearly $30 from a year ago, according to new data from realtor.com, and it was the fifth such consecutive drop for up to two-bedroom homes. The rental market is seeing a softening partly due to more supply of homes available for renters who are driving up the demand, the real estate platform said.
Mortgage rates have ballooned over the last two years as the Federal Reserve has hiked rates to their highest levels in two decades to battle inflation which spiked to a 40-year high at one point. The jump in rates has pushed the borrowing costs for homes making the prospect of buying a home unaffordable for Americans.
Last week, the 30-year fixed mortgage rate hit 8 percent. The last time it got that high was at the turn of the millennium. Some housing economists are begging the Fed not to raise rates again to give some relief to the sector that counts for 16 percent of U.S. economic activity.
When looking for homes, it may now just be cheaper to rent.
While historically it is always more expensive to buy than rent, the gap between the two is higher than it has been for years.
