Renters across the United States are witnessing a shift in the rental market landscape. Many are earning higher incomes, which enhances their purchasing power. However, this increase has not entirely translated into widespread affordability, with many renters still considered "rent burdened." This label applies to those spending over 30% of their income on rent and utilities, as defined by the Joint Center for Housing Studies at Harvard University.
Rising incomes have been accompanied by a notable uptick in rental unit construction, resulting in a moderation of rental prices in several areas. The median income among renters reached $54,752 in 2024, marking a 5.3% increase from the previous year and a significant 35.2% rise since 2019. Despite this growth, the median income remains 14% below what is necessary for tenants to comfortably afford rent.
"The majority of renters are rent burdened," – Daryl Fairweather, chief economist at Redfin.
The disparity between income and rental costs is particularly pronounced in major metropolitan areas like Los Angeles, Miami, New York, and San Diego. These cities remain among the most expensive in the nation, primarily due to a lag in construction activity relative to demand. Joel Berner, a senior economist at Realtor.com, attributes these high costs to a fundamental economic principle:
"It's a lack of new construction," – Joel Berner, a senior economist at Realtor.com.
Conversely, some regions have experienced more favorable rental market conditions. Austin, Texas stands out as the most affordable metro area. Here, renters earn an average annual income of $69,781, which is 25.14% higher than what is necessary to afford a typical apartment. This surplus income provides renters with greater financial flexibility compared to other parts of the country.
In contrast, Providence, Rhode Island has emerged as one of the least affordable areas due to its proximity to Boston. The influx of people seeking housing near this major urban center has driven up demand and consequently rental prices.
The decline in rental costs is also influenced by waning demand as individuals return to office-based work environments. This transition reduces the need for rental accommodations previously sought during remote work periods.
Construction activity continues to play a crucial role in reshaping rental affordability across the U.S. Areas where new developments have kept pace with demand have seen a more rapid decrease in rental prices. This trend underscores the importance of aligning construction efforts with market needs.
"Everything in the housing market is econ 101," – Joel Berner, a senior economist at Realtor.com.
Nonetheless, even with the slight decline in rental prices nationwide, the Redfin report highlights that the current median income is still insufficient for many renters to comfortably manage their housing expenses.