As rents continue to fall in July, all 50 largest U.S. metros favor renting a starter home compared to buying, according to the Realtor.com^® Rental Report released today (see full list below). This continues a trend seen in February as elevated mortgage rates, high home prices and falling rents contribute to the over $1,000 savings in renting over buying. At the same time last year, only 47 metros favored renting.

"For every major U.S. metro, renting a starter home continues to be more affordable than buying a starter home, continuing a trend we saw this February as rents declined and home prices continued to grow," said Ralph McLaughlin, senior economist at Realtor.com^®.  "However, we are starting to see the advantage of renting over buying decrease across several metros, especially as more affordable inventory hits the market. It has been a challenging time for potential first- time homebuyers, especially as rents have been so favorable, but with mortgage relief finally on the way, we might continue to see the advantage of renting shrink, giving homebuyers a path into their first home."

Additionally, this July marks the twelfth year-over-year rent decline in a row for 0–2-bedroom properties.

The top 10 metros with the largest rent versus buy savings (see below for top 50 metros):

1. Austin-Round Rock-Georgetown, Texas –buying cost 144.4% more than renting ($2,120 monthly rent savings)

2. Seattle-Tacoma-Bellevue, Wash. – 107.7% ($2,222)

3. Los Angeles-Long Beach-Anaheim, Calif. –99.5% ( $2,784)

4. Nashville-Davidson-Murfreesboro-Franklin, Tenn. –93.3% ($1,399)

5. Phoenix-Mesa-Chandler, Ariz. –91.6% ($1,396 )

6. Columbus, Ohio –91.3% ( $1,090 )

7. Dallas- Fort Worth-Arlington, Texas – 88.3% ($1,307)

8. San Francisco-Oakland-Berkeley, Calif. –88.2% ($2,442 )

9. New York-New Jersey-Jersey City, N.Y., N.J., Pa. –  81.1% ( $2,342)

10. Boston-Cambridge-Newton, Mass. –78.6% ($2,336)

Renting a starter home continues to be a more affordable option in all 50 metros
A common question potential first-time homebuyers face is whether it makes sense to continue renting or if it's time to make a home purchase, and one of the top considerations is the financial costs and benefits of renting versus owning. In July 2024, the cost of buying a starter home in the top 50 metros was $1,067 or 61.3% higher a month than renting one. This year, renting is a more affordable option than buying in all of the 50 largest metros, growing from last July, when only 47 metros saw rent as the more affordable option. Specifically, Memphis, Tenn., Birmingham, Ala., and Pittsburgh, Penn., were the three metros that flipped from buy-favoring to rent-favoring markets over the past 12 months.

Austin, Texas, where the monthly cost of buying a starter home was $3,558 – 144.4% more than the monthly rent of $1,468, for a monthly savings of $2,120 – topped the list of markets most favoring renting. Other top markets favoring renting over buying were Seattle, Los Angeles, San Francisco and New York. While Dallas, Texas and Columbus, Ohio have relatively lower buy cost, the affordable rental prices in these two markets propelled them to the top ten rent-favoring metros.

Change on the Horizon? The Advantage of Renting Shrank in Many Metros
Compared to last year, the advantage of renting shrank by 2 percentage points propelled by a greater influx of smaller and more affordable homes for sale leading to a slight decline in listing prices for starter homes. Last July, the average monthly cost of buying a starter home in the top 50 metros was 63.3% higher than renting, this July the cost of buying a starter home is 61.3%  higher than renting. Although the overall advantage of renting narrowed by 2 percentage points or $42 across the top 50 metros compared to a year ago, it was still $758 higher when compared to five years ago (pre-pandemic).

Over the past year 23 of the top 50 markets saw a diminishing rent advantage over the past 12 months and this advantage shrank the most in San Francisco, Calif. San Jose, Calif, Denver, Colo., Washington, D.C., and Miami, Fla. It is not surprising to see the rent advantage diminished most in these metros as homes in these markets experienced large listing price declines on a yearly basis.  

However, not every metro saw a diminishing advantage in renting. In fact Memphis, Tenn., and Birmingham, Ala. are two metros who became rent-favoring over the last 12 months, where we see  a large share of home buying activity from investors.

Top metros with diminishing advantage in renting (Dollar amount difference from July 2023 to July 2024)

1. San Francisco-Oakland-Berkeley, Calif. – -$563

2. San Jose-Sunnyvale-Santa Clara, Calif. – -$468

3. Denver-Aurora-Lakewood, Colo. – -$314

4. Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va – -$282

5. Miami-Fort Lauderdale-Pompano Beach, Fla. – -$273

Top metros with increasing advantage in renting (Dollar amount difference from July 2023 to July 2024)

1. Memphis, Tenn.-Miss.-Ark. – $246

2. Birmingham-Hoover, Ala. – $209

3. New York-New Jersey-Jersey City, N.Y., N.J., Pa – $173

4. Los Angeles-Long Beach-Anaheim, Calif. – $156

5. Richmond - Va. – $130

Realtor.com®'s rent versus buy calculator can help consumers determine if the cost of homeownership is a better deal than renting based on their location and budget.

Rental Data – 50 Largest Metropolitan Areas – July 2024

Methodology

Rental data as of July 2024 for studio, 1-bedroom, or 2-bedroom units advertised as for-rent on Realtor.com®. Rental units include apartments as well as private rentals (condos, townhomes, single-family homes). We use rental sources that reliably report data each month within the top 50 largest metropolitan areas. Realtor.com® began publishing regular monthly rental trends reports in October 2020 with data history stretching back to March 2019.

The monthly cost of buying a home was calculated by averaging the median listing prices of studio, 1-bed, and 2-bed homes, weighted by the number of listings, in each housing market. Monthly buying costs assume a 8% down payment, with a mortgage rate of 6.85%, and include taxes, insurance and HOA fees.

With the release of its July 2024 rent report, Realtor.com® incorporated a new and improved methodology for capturing and reporting more comprehensive rental listing trends and metrics. The new methodology is expected to yield a cleaner, more representative and more consistent measurement of rental listings and trends at both the national and local level. The methodology has been adjusted to better represent the true cost of primary housing for renters. Most areas across the country will see minor changes with a smaller handful of areas seeing larger updates. As a result of these changes, the rental data released since July 2024 will not be directly comparable with previous releases and Realtor.com® economics blog posts. However, future data releases, including historical data, will consistently apply the new methodology.