New data shows affordability is still the leading challenge for U.S. renters, as Americans spent 30% of their monthly budgets on rents in February on average, according to the latest realtor.com® Monthly Rental Report released this week. In February, the U.S. median rental price hit a new high of $1,792 and soared by double-digit percentages (+17.1% year-over-year) for the seventh month in a row, the report revealed.
February rents accounted for an even higher portion of household incomes in 14 of the 50 largest U.S. markets, the report stated, with the list of least affordable areas dominated by Sun Belt metros like Miami, Tampa, Fla. and San Diego, Calif.
Among unit sizes, studio rents increased at the fastest annual pace, up 17.1% (+$215) to a median of $1,474. Larger unit rents also posted double-digit gains over February 2021: 1-bedrooms, up 16.4% (+$232) to $1,648; and 2-bedrooms, up 16.2% ($278) to $2,002.
Regional breakdown:
Sun Belt: February rents accounted for an even higher portion of household incomes in 14 of the 50 largest U.S. markets, with the list of least affordable areas dominated by Sun Belt metros like Miami, Tampa, Fla. and San Diego, Calif. These locations topped February’s lists of fastest-growing and least affordable rental markets, as well as the hottest homebuying destinations. In Miami, the median rental price spiked 55.3% year-over-year in February.
Middle America: In many large markets in Middle America, rents came in below the recommended max share of monthly paychecks, and the region accounted for more than half of February’s most affordable rental markets, including Kansas City, Oklahoma City, and St. Louis. But even in these markets, renters devoted more of their monthly paychecks towards housing costs than the previous year.
The takeaway:
“Whether it’s rent or mortgage payments, the general rule of thumb is to keep monthly housing costs to less than 30% of your income. And with rents surging nationwide, February data indicates that many renters’ budgets may be stretched beyond the affordability limit,” said Realtor.com® Chief Economist Danielle Hale. “With rents up by nearly 20% over the past two years, rental prices are likely to remain high, but we do expect some cooling from the recent accelerated pace. In light of mounting economic uncertainties and the conflict in Ukraine, some households will prefer to buy, in an effort to lock-in a largely fixed monthly payment as a hedge against further inflation. But fast-rising mortgage rates and still-limited numbers of homes for sale could mean some would-be buyers may stick with the flexibility of renting. With rental demand already outmatching supply, rental affordability will remain a challenge.”
