Homeownership vs. Renting: Key Insights from NAR's Recent Data

The National Association of Realtors (NAR) provided a comprehensive snapshot of the current housing market, highlighting key statistics about homeownership and renting in America. These insights reveal trends that are reshaping the housing landscape and have significant implications for both homeowners and renters.

Homeownership Trends

As of the third fiscal quarter of 2023, the nationwide homeownership rate stood at 66.0%, a slight increase from the previous quarter. 34% of American households are now renting, reflecting a decline in homeownership rates over recent years. In 2022, 84.6 million out of a total of 129.9 million households owned their homes.

The Wealth Gap Between Homeowners and Renters

The disparity in wealth between homeowners and renters is stark. The median household wealth among homeowners is 3,709% higher than that of renters. Even when excluding home equity, homeowners' wealth is still 606% higher than that of renters. This significant gap underscores the financial advantages of homeownership.

Rental Market Dynamics

Renters are more likely to face financial difficulties compared to homeowners. They are 178.7% more likely to be behind on housing payments. Despite the challenges, renting remains a prevalent choice, with 45.2 million households renting their homes. The rental market shows a higher vacancy rate of 6.6% compared to the homeowner vacancy rate of 0.8%, indicating a more dynamic rental market with more frequent turnover.

Housing Affordability Challenges

Both homeowners and renters experienced financial hardships during the COVID-19 pandemic, but renters were more likely to face housing cost burdens. While half of renter households and 40% of homeowners lost income between March 2020 and March 2021, renters spent a larger portion of their federal stimulus checks on housing costs. The rising cost of rent, which increased by 61% from 1960 to 2016 after adjusting for inflation, further exacerbates the financial strain on renters.

Demographic Insights

Renter households are more likely to be single occupants, with 38.3% of renting households consisting of a single person. In contrast, 59.6% of homeowners are married couples. Additionally, homeownership rates are highest among older age groups, with 77.9% of individuals over 65 owning their homes, compared to only 35.1% of those under 35.

Texas

In Texas, 62.5% of households own their homes, slightly lower than the national average. The median monthly mortgage payment in Texas is $1,904, higher than the national median. Texas also has a notable rental vacancy rate of 9.0%, reflecting a dynamic rental market.

The Impact of Rising Home Equity

Rising home equity offers a balance to the challenges posed by increasing interest rates. Homeowners can leverage their equity to invest in other properties, finance home improvements, or access emergency funds. This flexibility provides a financial cushion that renters typically lack.

Conclusion

The data from NAR highlights the evolving dynamics of homeownership and renting in the United States. While homeownership remains a significant source of wealth, the increasing number of renters and the financial challenges they face underscore the need for policies that address housing affordability and support both renters and homeowners.