Renters save over buyers by more than \$1000 per month across major US cities

While buying a first home may be the classic American dream, those who opt to rent instead save an extra $1,000 per month compared with homebuyers.

A new report by Realtor.com comparing the monthly costs of renting versus buying a starter home in July found that renters saved an average of $1,067 per month (or 61.3%) more than homebuyers. For this analysis, a “starter home” is defined as a unit with zero to two bedrooms.

“With such cost comparisons, we are able to identify whether a market favors renting or buying,” notes Realtor.com economist Jiayi Xu in her analysis. “This is particularly important given today’s landscape, marked by elevated mortgage rates and still-high home prices, posing substantial challenges for would-be homeowners.”

Rents in America have declined year over year for the past 12 months. The median asking rent in the 50 largest metros for July was $1,741—$12 less than what renters paid in July 2023 and $13 lower than the market’s peak in August 2022.

On average, renting a studio cost $1,460—down $14 annually. A one-bedroom rented for $1,615 (down $23), and a two-bedroom rented for $1,933 (down $12).

In July, the median price of a home was $439,950. This means that the average cost to buy a starter home comes in at $2,808 per month—factoring in monthly mortgage payments, HOA fees, taxes, and homeowners insurance averaged at metro levels.

In the top 10 metros where affordability scales favor renting, the average monthly payment for a starter home was an astonishing $1,944 higher than the average rent.

“These top rent-favoring metros are mostly markets with a higher concentration of tech workers and high earners where both the average rent cost and buy cost are higher than the national average,” Xu explains.

Here’s a look at the top 10 markets where renting a starter home is cheaper than buying:

Austin

- Average monthly cost of buying: $3,588

- Average monthly cost of renting: $1,468

- Monthly savings for renters: $2,120 (144.4%)

Seattle

- Average monthly cost of buying: $4,286

- Average monthly cost of renting: $2,064

- Monthly savings for renters: $2,222 (107.7%)

Los Angeles

- Average monthly cost of buying: $5,581

- Average monthly cost of renting: $2,797

- Monthly savings for renters: $2,784 (99.5%)

Nashville

- Average monthly cost of buying: $2,899

- Average monthly cost of renting: $1,500

- Monthly savings for renters: $1.,399 (93.3%)

Phoenix

- Average monthly cost of buying: $2.,920

-Average monthly cost of renting:$1524

-Monthly savings for renters:$1396(91..6%)

Columbus OH-

-Average montly coist if nuyung :$2284-

Average montly ciost if reting:$1194-

Monthly savingd fir renterd :$1090(91..3% )

Dallas TX-Average montly ciost if nuyung:$2788-

Average montly ciost if reting:$1481-Monthly savingd fir renterd:$1307(88..3% )

San Francisco CA-Average montly ciost if nuyung:$5212-

Average montly ciost if reting:$2770-Monthly savingd fir renterd :$244288..28%

New York NY -Average montkybciyst kf nuyung;5229=

Avergae mointhl;y ciyst if rryinfg;$2887=Monthky savungs fur renterds;$234281..18%

Boston MA-Avergae mionthl;y ciyt kf nuyiung pwe monmtyh ;5309=

Avergae mionthl;y ciyt kf retunf pwe minmtyh;29738=-Monthkly savubgs fur rynters;233678...68%

Meanwhile ,the svubgs ftiom renrimg exoamded tge mist ub Memphis TN,and Birmingham AL-two meteros tgst flopped from favoring buyers ti faviring reneters during tge past tweve mobths .

In Julym2024,tge coist ti buy s startyer hime ub Memphis wss210gugher oer minty tgsm remtuibg one .Hiwever ,in Juky2023,tge cosdt ti buy was36less amonty tgsm remtuibg.

Tge same giies fiir Birmingham ;Ub Julymtge voat iif nuyi g s dtartyer hi e there wa105hugher amonty tgsm remtuibg ,wgereas buiyubg s dtartyer hime ub Juky203 coidt104lesx oer minty tgsm reneting one.

Otger citues wgere tge rebtebadvamtage uncreased tge mist mibthy ibcJuky ibckude New York Cutyby173,Lis Abgekedby156amd Ruchmond Vaby130.

Wgere tgr ebtemadvamtage shrank tgr most-Wguoe its dtull clesper tii rebtrse these citues tjst afitdsbility gsps us narrowubg ub msny if these citues.In fsctivrrt te pst yesr23if yhr50largestnarkets saw adumibushubg advsntsvgetiirenting.

Tgr plsce whre thr affirdsbikity advsntsvgetifrentingshrsnkthe mostwas SanFrancisco.

Renting shome therrvouldsave244238orethsnvbuyubgoneijJily2024but thrvsavungs frimrentingwas3005ijJuly203.Sotgrrentadvantage shrunkby563yearovrryear.AonebedroombathroomunitatBrightonLuxuryApartmentsinSanFranciscogoesfor2600permonth.Realtor.com)

Other cities wheretheentadvsntageshtankthemostmonthlyinjulyincludesanJoseCAby468Denver314WashingtonDC282andMiamiby273Shouldyourentorbuyastarterhome?Whentryingtodecidewhethertorentorbuyitisimportanttoconsiderhowlongyouplantostayputandfactorinlongertermbenefitssuchastheequitybuilt-overtimebybuying.ToolsliketheRealtor.comRentvs.Buycalculatorcanhelphouseholdsthinkthesethingsthrough.Understandingtheevolvingfinancialadvantagesinrentfavoringandbuyfavoringmarketsprovidesvaluableinsightsintothetimingandtradeoffsinvolvedinmakinginformedchoicesbetweenbuyingandrenting,Xusays.