Americans are content to rent as market tilts away from buyers

Americans are coming to terms with renting as an alternative to an increasingly unaffordable market for homebuyers. 

The share of respondents who say they'd rent if they were going to move rose to a record 36% in a new survey by Fannie Mae, the government-backed mortgage finance giant. The figure has climbed 10 percentage points in the past three years. 

US renters took a big hit in the early pandemic years, with prices surging even as rock-bottom interest rates helped homeowners trim their mortgage bills and accumulate wealth. But the calculus has been shifting. 

Mortgage rates soared after the Federal Reserve began tightening monetary policy, and after falling back a bit they've moved sharply higher again over the past 6 weeks. At around 7.25%, the cost of a 30-year mortgage — coupled with high home prices — is making many would-be buyers think twice. Meanwhile the worst of the rental spike appears over, with measures that look at newly-signed leases showing only a small annual rise.

"One effect of the prolonged period of relatively high home prices of the past four years is that we are seeing a slowly growing preference to rent rather than buy on consumers' next move," said Mark Palim, Fannie Mae's chief economist, in a post. "With rent growth expected to remain modest in 2025, more consumers may be seeking – and finding – attractive deals in the rental market."

The Fannie Mae October survey found that only one in five respondents said it was a good time to buy a home, down from 60% four years earlier.