Renting is still dramatically cheaper than owning — and the gap is reshaping housing demand across the U.S.
In Q4, the median monthly mortgage payment reached $3,026, while the average rent was $1,854, leaving a $1,182 monthly gap between owning and renting. That spread is now more than double the long-term average of $424, and it hasn’t dropped below $500 since early 2022. The shift began when mortgage rates jumped from 3.82% in early 2022 to roughly 6.23%, while home prices remained elevated despite some cooling.
The pricing pressure built during the pandemic housing surge. Median home prices climbed from $317,100 in 2020 to a peak of $442,600 in 2022, and although they have since eased to about $405,300, they remain far above pre-pandemic levels. Even with the recent drop in the 30-year mortgage rate to 5.98%, ownership costs are still heavily influenced by those higher home values and borrowing costs.
As a result, many would-be buyers have shifted into the rental market or delayed homeownership altogether. In 2025 alone, the U.S. absorbed 355,628 apartment units, marking the third-strongest year for multifamily demand in the past 25 years. Consumer sentiment data reflects the same hesitation, with 79% of consumers saying it was a bad time to buy a home in late 2025, while mortgage application activity remains well below historic highs.
For brokers, lenders, and investors, the affordability gap is now influencing multiple housing segments. Many households who would traditionally buy entry-level homes are remaining renters longer, which deepens demand not only for apartments but also for single-family rentals and build-to-rent communities designed for would-be homeowners. Until mortgage costs move materially lower or home prices correct further, rental housing — including SFR and BTR — will likely continue absorbing demand that historically flowed into home purchases.
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