Higher mortgage rates mean renters are increasingly finding more affordable housing options over first-time home buyers, according to a monthly report by Realtor.com.
Nationally, the gap between monthly starter homeownership costs and rents widened by 25.5 percentage points (+$483) from January to June, according to the Realtor.com Monthly Rental Report released June 21.
More than three-quarters of the 50 largest metro areas in the U.S. favored renting in June, compared to just under half in January.
The U.S. median rental price hit a new high for the 16th consecutive month in June at $1,876, rising 14.1% year-over-year in the fifth consecutive month of moderation from January’s peak (+17.3%).
But that price still lagged behind typical starter homeownership costs, the report said, and by a greater amount than at the start of the year.
“This growth is largely attributed to the skyrocketing cost of financing a home purchase, with mortgage rates jumping more than two percentage points from January to June,” according to the report.
Nationally, monthly starter homeownership costs were an average of 29.9% ($561) higher than rents in June, up from 4.4% ($78) in January. In 2021, the monthly cost to buy was $1,815, just $171 higher than rents nationwide.
In New York, the monthly cost difference of buying vs renting is 70%, or $2,000 more, and in Boston, it’s 57.3%, or roughly $1,700. Both metro areas have a median rent cost of nearly $3,000 a month. In the metro Hartford area, the cost of buying is 15% or $262 more per month than renting. The median rent is $1,700.
There are a number of housing projects in the works throughout Connecticut, including hundreds of new apartments planned for downtown Hartford this year.
But the pace of new construction slipped last year, due to a steep decline in the number of new building permits pulled for multifamily development.
Builders and housing advocates said a national trend of low rental stock means rising rental costs won’t slow anytime soon.
