Renting vs buying: What's the better option in the current economy?
Renting still offers significant monthly savings over buying in most of the country, but an economist says the long-standing affordability gap is gradually starting to close.
Realtor.com senior economist Joel Berner told FOX Business that renting is still significantly more affordable than buying a starter home in 49 of the 50 largest metros across the U.S., with Pittsburgh being the lone exception. This hasn't changed since Realtor.com issued its June 2025 report, which noted that renting saves over $900 a month when compared to buying a starter home.
However, Berner noted that this is a simple analysis of monthly costs that does not take into account the equity accumulation that comes from owning a home versus renting it.
But it’s important to look at the long-term picture when deciding whether to buy a home.
"In the long term, owning a home exposes you to the appreciation in the value of your property, so your monthly payments that build up your ownership stake in the home are actually a money-making proposition rather than an expense like paying rent is," he said.
Still, even with those long-term financial advantages, many would-be buyers remain sidelined.
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It's been particularly difficult to break into the market for first-time buyers in the current economy as borrowing rates and home prices have remained elevated. These higher monthly housing payments have forced more households that might otherwise be ready to purchase, to stay put in their rentals longer as a means to save, pay down debt or avoid overstretching their budgets.
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But Redfin chief economist Daryl Fairweather told FOX Business that while monthly rental payments remain lower than monthly mortgage payments, that gap is closing.
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Fairweather said that borrowing to buy a home has become more affordable this year. While there wasn't a dramatic drop, the mortgage payment on a median-priced home fell 0.7% since last year as asking rents rose 2.6% since last year.
For example, Fairweather pointed to a condo in Austin that is currently listed for $199,000, which would equate to a $985 monthly mortgage payment on a 6.3% 30-year-fixed rate with 20% down. This doesn't include HOA fees, insurance or taxes. That same condo was listed as a rental in October for $800 per month, Fairweather said.
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Realtor.com senior analyst Hannah Jones said while this gap is closing, "it's closing from a really massive gap to a little bit less massive gap in a lot of places."