Rents Rise Faster Than Home Values for First Time in a Decade

A for rent sign is displayed outside an apartment building in Los Angeles on Sept. 22, 2022. Allison Dinner/Getty Images

Rental costs in the United States last year outpaced the rise in home values for the first time since 2011, according to a new U.S. Census Bureau report, which reveals that nearly half of the country’s renter households are “cost-burdened,” meaning they spend more than 30 percent of their income on housing.

The Census Bureau’s American Community Survey for 2023, released on Sept. 12, shows that the median gross rent, which includes both rent and utilities, increased by 3.8 percent in 2023, reaching $1,406 per month, compared to a 1.8 percent rise in median home values. This represents the largest real (inflation-adjusted) increase in rental costs in 12 years.

The Census report also shows that 49.7 percent of America’s renters—more than 21 million households—spend more than 30 percent of their income on housing. The U.S. Department of Housing and Urban Development (HUD) considers renters at that point to be “cost-burdened.”

While the 30-percent rule is widely accepted in academia and elsewhere, some experts suggest that using only income ratios is too simplistic a way to reflect housing affordability, and some hold that a “severe” housing cost burden is when households spend more than 50 percent of their income on housing.

The Census Bureau report further shows that, on average, the percentage of renter income devoted to housing costs remained at 31 percent last year, unchanged from 2022. Experts suggest that this stability can be attributed to the fact that renter incomes have generally kept pace with rising rent, or with the growing number of higher-income households opting to rent.

Homeowners had a lower median housing cost as a percentage of income than renters last year—21.1 percent for homeowners with a mortgage and 11.5 percent for those without one.

Although homeowners faced a lower housing cost burden than renters, a significant expense for them was property insurance, according to the Census Bureau report. More than 5.4 million of the 85.7 million homeowners in the United States paid $4,000 or more for homeowner’s insurance in 2023, with Florida having the highest number of such households.

The increase in rental costs last year and the burden on renters were not uniform across the country.

“The fact that the gross rent share of income did not rise nationally and in most states despite significant increases in rental costs could be due to higher renters’ incomes or to an increase in higher-income households joining the population of renters,” Census Bureau experts wrote in a blog post that accompanied the release of the American Community Survey.

States such as Arizona, Florida, and Georgia saw significant increases in the share of renter incomes devoted to housing. Arizona’s rental costs jumped by 6.5 percent, while Florida and Georgia recorded 8.2 percent and 6 percent increases, respectively.

By contrast, the share of renters’ incomes spent on rent decreased in six states: Illinois, Kansas, Minnesota, New Mexico, New York, and West Virginia.

Higher rent burdens generally make it harder to afford other necessities, such as food and transportation, and push first-time homeownership further out of reach. Spending a higher percentage of one’s income on rent makes it more difficult to save for a down payment.