The supply of new single-family homes is sinking, while accelerated multifamily construction is bringing more rental units online.
These two factors have resulted in renter households growing at three times the rate of homeowner households, according to a new report from Redfin that crunched U.S. Census Bureau data back to 1994.
U.S. renter households grew 1.9% year over year in the second quarter of 2024, hitting 45.2 million. Meanwhile, homeowner households grew by only 0.6% to 86.3 million. Yearly growth for renter households peaked at 2.8% in the first quarter of 2024, while the growth rate for homeowner households in Q2 2024 was at its slowest pace since 2019.
“The cost of both renting and buying a home has skyrocketed in recent years, but the affordability crunch isn’t quite as severe in the rental market,” Redfin senior economist Sheharyar Bokhari said in a statement. “That’s because America has been building a lot of apartments to keep pace with robust demand from renters. The country’s leaders should heed this lesson when considering how to improve affordability in the homebuying market: When there’s more housing to go around, prices don’t increase as fast.”
The growth of both types of households are driven by the same factors.
The fact that the total number of households in each category is at an all-time high is simply a function of a growing population. The cost of buying a home has risen much faster than renting one, according to Redfin, which is pushing homeownership out of reach and slowing sales. And with new multifamily construction coming online, there are more units available for renters to form new households.
According to the report, new multifamily housing in the U.S. hit an annual rate of 563,000 in the second quarter, the second-fastest rate in the data going back to 1994 and surpassed only by the pace of Q1 2024. But multifamily building permits have slowed dramatically since the post-pandemic boom, which in the aggregate will put upward pressure on rent prices.
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