Renting Is $1,066 Cheaper Per Month Than Buying and Investing It Pays Off (August Rent Report)

 

• According to the Zillow Observed Rent Index, the typical U.S. rent is $1,948 a month. The typical new home buyer's monthly payment is $3,014, a difference of $1,066 a month or $12,792 a year.
• By investing the monthly difference between renting and owning, renters can earn an additional $322 in the first year, compounding to $8,041 over five years.
• The savings are most dramatic in high-cost coastal markets. San Jose renters typically pay $94,596 less than buyers in a year and can earn an additional $2,381 by investing those savings. 

In August, the typical renter paid $1,066 less per month than the typical home buyer. Rent was $1,948 while the typical mortgage payment plus taxes and insurance totaled $3,014¹ — a gap that has grown as mortgage costs have risen faster than rents. For renters who can set that difference aside, it could translate into meaningful long-term savings. 

Consider what that monthly difference can become. At $1,066 a month, renters save $12,792 a year over owning a home, and those who invest it at the rate of the 10-year Treasury yield² earn an additional $322 in the first year alone. Assuming rents and home buying costs remain stable, that could turn into a cumulative total of $72,000 after five years — real wealth built without the hidden costs of homeownership like closing costs, maintenance and more.

Across most of the country, the rent versus buy decision typically favors renting for households that plan to stay for five years or less. The cash flow difference in a five-year period could be tens or even hundreds of thousands of dollars for those choosing to rent.

When mortgage costs run hundreds of dollars more per month than rent, choosing to rent and deliberately saving and investing the difference is often a sound financial decision. But the calculus goes beyond monthly costs. Renters benefit from the flexibility to move more easily, while buyers gain the stability of predictable payments year after year. 

Renting costs less in every major U.S. market

The monthly savings from renting over buying are not limited to one region or price point. In each of the 50 largest U.S. metros, the typical rent is lower than the typical monthly payment for a new homeowner. The gap has widened as the monthly cost for home buyers rose $140 over the past six months, more than four times the $32 increase in typical rent over the same period. That gap could shrink over time, as softness in the for-sale market and a slowdown in new apartment supply work through the system, but today renting remains the more affordable option in every major market.

The savings are most dramatic in high-cost coastal markets, where home prices have climbed far faster than rents. Renters in San Jose can save the most — $7,883 per month compared to a typical mortgage payment — followed by San Francisco ($5,413/month), Los Angeles ($4,441/month) and San Diego ($4,235/month). For renters in those markets who invest the difference at the rate of the 10-year Treasury yield, the first-year investment return alone could reach as high as $2,381 in San Jose and $1,635 in San Francisco.

The cost of buying vs. renting goes beyond the monthly payment

The affordability divide between renting and buying extends beyond the monthly payment. A household needs $77,919 in annual income to afford the typical U.S. rental, compared to more than $120,500 to afford a typical mortgage payment with 10% down, a gap of more than $42,000. With mortgage costs continuing to outpace rent growth, that divide is widening.

Metro Area*	Zillow Observed Rent Index (ZORI)	ZORI Growth, Year over Year	Typical New Home Buyer Monthly Payment (Including Taxes and Insurance)	Monthly Savings (Rent vs. Buy)	Annual Savings (Rent vs. Buy)	Annual Investment Return (4.68%)
United States	$1,948	2.5%	$3,014	$1,066	$12,792	$322
New York, NY	$3,615	4.2%	$6,244	$2,629	$31,548	$794
Los Angeles, CA	$2,941	1.6%	$7,382	$4,441	$53,292	$1,342
Chicago, IL	$2,210	4.9%	$3,092	$882	$10,584	$266
Dallas, TX	$1,659	0.4%	$3,181	$1,522	$18,264	$460
Houston, TX	$1,643	0.0%	$2,646	$1,003	$12,036	$303
Washington, DC	$2,433	0.8%	$4,633	$2,200	$26,400	$665
Philadelphia, PA	$1,911	3.6%	$3,331	$1,420	$17,040	$429
Miami, FL	$2,666	1.6%	$4,196	$1,530	$18,360	$462
Atlanta, GA	$1,853	2.0%	$3,122	$1,269	$15,228	$383
Boston, MA	$3,074	2.4%	$5,903	$2,829	$33,948	$855
Phoenix, AZ	$1,722	0.7%	$3,356	$1,634	$19,608	$494
San Francisco, CA	$3,409	10.8%	$8,822	$5,413	$64,956	$1,635
Riverside, CA	$2,541	2.8%	$4,630	$2,089	$25,068	$631
Detroit, MI	$1,524	3.8%	$2,258	$734	$8,808	$222
Seattle, WA	$2,278	1.7%	$5,789	$3,511	$42,132	$1,061
Minneapolis, MN	$1,719	3.5%	$3,307	$1,588	$19,056	$480
San Diego, CA	$2,994	2.0%	$7,229	$4,235	$50,820	$1,279
Tampa, FL	$2,001	-0.1%	$3,101	$1,100	$13,200	$332
Denver, CO	$1,922	-0.6%	$4,426	$2,504	$30,048	$756
Baltimore, MD	$1,948	2.6%	$3,286	$1,338	$16,056	$404
St. Louis, MO	$1,443	3.9%	$2,364	$921	$11,052	$278
Orlando, FL	$1,942	0.7%	$3,257	$1,315	$15,780	$397
Charlotte, NC	$1,749	1.0%	$3,036	$1,287	$15,444	$389
San Antonio, TX	$1,422	-1.3%	$2,422	$1,000	$12,000	$302
Portland, OR	$1,818	0.6%	$4,358	$2,540	$30,480	$767
Sacramento, CA	$2,282	1.7%	$4,581	$2,299	$27,588	$694
Pittsburgh, PA	$1,469	3.4%	$2,005	$536	$6,432	$162
Cincinnati, OH	$1,522	2.6%	$2,575	$1,053	$12,636	$318
Austin, TX	$1,622	0.0%	$3,676	$2,054	$24,648	$620
Las Vegas, NV	$1,742	0.1%	$3,232	$1,490	$17,880	$450
Kansas City, MO	$1,529	3.6%	$2,800	$1,271	$15,252	$384
Columbus, OH	$1,521	2.6%	$2,759	$1,238	$14,856	$374
Indianapolis, IN	$1,552	3.3%	$2,430	$878	$10,536	$265
Cleveland, OH	$1,454	4.5%	$2,218	$764	$9,168	$231
San Jose, CA	$3,815	7.6%	$11,698	$7,883	$94,596	$2,381
Nashville, TN	$1,813	0.8%	$3,530	$1,717	$20,604	$519
Virginia Beach, VA	$1,891	6.6%	$3,066	$1,175	$14,100	$355
Providence, RI	$2,167	4.3%	$4,294	$2,127	$25,524	$643
Jacksonville, FL	$1,696	1.8%	$2,981	$1,285	$15,420	$388
Milwaukee, WI	$1,563	5.0%	$3,375	$1,812	$21,744	$547
Oklahoma City, OK	$1,388	2.3%	$2,180	$792	$9,504	$239
Raleigh, NC	$1,675	0.8%	$3,460	$1,785	$21,420	$539
Memphis, TN	$1,400	1.0%	$2,108	$708	$8,496	$214
Richmond, VA	$1,729	2.5%	$3,156	$1,427	$17,124	$431
Louisville, KY	$1,348	1.6%	$2,317	$969	$11,628	$293
New Orleans, LA	$1,598	1.4%	$2,424	$826	$9,912	$250
Salt Lake City, UT	$1,641	0.5%	$4,281	$2,640	$31,680	$797
Hartford, CT	$2,034	3.2%	$3,565	$1,531	$18,372	$462
Buffalo, NY	$1,449	3.5%	$2,272	$823	$9,876	$249
Birmingham, AL	$1,433	2.0%	$2,101	$668	$8,016	$202

*Table ordered by market size. 

Rents

• The typical asking rent is $1,948 in August, up 0.2% month-over-month, in line with the pre-pandemic average month-over-month change for this time of year.
• Since the beginning of the pandemic, rents have increased by 38.5%.
• Rents are now 2.5%  up from last year.
• Rents fell, on a monthly basis, in 8 major metro areas. The largest monthly drops are in Boston (-0.7%), Las Vegas (-0.3%), Richmond (-0.2%), Chicago (-0.1%), and Memphis (-0.1%).
• Rents are up from year-ago levels in 46 of the 50 largest metro areas. Annual rent increases are highest in San Francisco (10.8%), San Jose (7.6%), Virginia Beach (6.6%), Milwaukee (5%), and Chicago (4.9%).

Single-Family Rents

• The typical asking rent for single-family homes is $2,289 in August, up 0.2% month-over-month. Since the beginning of the pandemic, single-family rents have increased by 47%.
• Single-family rents are now up 3% from last year.
• Single-family rents fell, on a monthly basis, in 15 major metro areas. The largest monthly drops in single-family rents are in Boston (-1.2%), New Orleans (-0.4%), New York (-0.3%), Oklahoma City (-0.3%), and Austin (-0.2%).
• Single-family rents are up from year-ago levels in all 50 of the largest metro areas. Annual single-family rent increases are highest in San Jose (6.8%), San Francisco (6.4%), Cleveland (5.4%), Hartford (5.3%), and Milwaukee (5%).

Multifamily Rents

• The typical asking rent for multifamily homes is $1,774 in August, up 0.2% month-over-month. Since the beginning of the pandemic, multifamily rents have increased by 30.2%.
• Multifamily rents are now up 1.9% from last year.
• Multifamily rents fell, on a monthly basis, in 11 major metro areas. The largest monthly drops in multifamily rents are in Boston (-0.5%), Richmond (-0.5%), Las Vegas (-0.4%), Louisville (-0.2%), and Chicago (-0.2%).
• Multifamily rents are up from year-ago levels in 37 of the 50 largest metro areas. Annual multifamily rent increases are highest in San Francisco (11.6%), San Jose (7.7%), Virginia Beach (7%), Chicago (4.8%), and Milwaukee (4.8%).

Rent Concessions

• 39.2% of rentals on Zillow offered concessions in August.
• The share of rental listings offering concessions decreased by 0.6ppts month-over-month in August.
• The share of rental listings offering concessions increased by 2.5ppts from last year.
• The share of rentals with concessions is lower, on a monthly basis, in 33 major metro areas. The largest monthly drops in the share of rentals with concessions are in Salt Lake City (-4.5ppts), San Antonio (-2.6ppts), New Orleans (-2.5ppts), Sacramento (-2.2ppts), and Chicago (-2.2ppts).
• The share of rentals with concessions is higher, on a monthly basis, in 17 major metro areas. The largest monthly increases in the share of rentals with concessions are in Detroit (2.7ppts), San Jose (2.5ppts), Milwaukee (2.3ppts), Baltimore (1.9ppts), and Richmond (1.7ppts).
• Rent concessions are up from year-ago levels in 41 of the 50 largest metro areas. The annual increase in share of rental listings with concessions is highest in Cincinnati (15.9ppts), Las Vegas (9ppts), St. Louis (8.8ppts), Tampa (8.2ppts), and Indianapolis (7.6ppts).

Rent Affordability

• The median household would spend 26.6% of their income on a new rental in August.
• Rent affordability was flat month-over-month in August. The pre-pandemic share of median household income spent on rent was 25.9%.
• Rent affordability is now 0.1ppts down from last year.
• The most affordable metro areas for rents are Austin (18.3%), Raleigh (18.3%), Salt Lake City (18.3%), Minneapolis (19.7%), and St. Louis (19.8%).
• The least affordable metro areas for rents are New York (40.6%), Miami (36.9%), Los Angeles (34.0%), Riverside (31.2%), and San Diego (30.5%).
• Income needed to afford rent increased by 2.6% year-over-year in August to $77,919. Since pre-pandemic, the income needed to afford rent has increased by 37.2%.

[1] Assumes a 30-year fixed-rate mortgage with 10% down at a 6.67% rate on a typical home based on the Zillow Home Value Index. Monthly payment figures include estimates for taxes and insurance.

[2]  The 10-year Treasury yield is used as a benchmark for this analysis to proxy the risk-free rate of return, consistent with Zillow’s rent versus buy methodology. Rate as of August 2026: 4.68%.