Is it better to rent or buy? New LendingTree data suggests renting may be the more affordable option.
The median monthly gross rent payment in the U.S. is $1,487, while homeowners pay about 36.9% more on average, according to LendingTree. The typical monthly mortgage payment is $2,035.
LendingTree said the gap between rent and mortgage payments widened by about $500 between 2023 and 2024. While costs vary by area, there isn’t a single metro among the nation’s 100 largest where renting is more expensive than owning.
In Bridgeport, Connecticut, buyers pay about $1,565 more per month than renters. In Phoenix, the difference is just $184.
Although renting generally costs less — and avoids the upkeep expenses of homeownership — buying has long-term benefits. Putting money toward a mortgage can help build equity, but that depends largely on how long you stay in the home.
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“The equity you can build in a home you own can provide valuable financing options in the future for things like a home remodel, starting a business or knocking down high-interest debt,” said Matt Schulz, LendingTree’s chief consumer finance analyst. “To reap all of these benefits, you likely need to stay in the home for more than a few years. But it can pay off if that’s your plan.”
Schulz noted that higher interest rates have discouraged both first-time buyers and current homeowners from purchasing. For those who already own and want to upgrade, many feel locked in to their lower-rate mortgages.
“They’re choosing not to buy a new home because they’re reluctant to trade their current low-rate mortgage for one at today’s higher rates,” Schulz said. “Some people are even becoming resigned to the fact that they’ll never be able to own a home. That sort of decision has massive ramifications, not just for individuals but for the economy as a whole. Unfortunately, however, that doesn’t seem likely to change anytime soon.”
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LendingTree offered a few tips for renters who are considering buying a home:
- Control what you can control.
- Understand your priorities.
- Build a realistic timeline and stick to it.
