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Rental affordability in the United States improved at the end of 2024, with the required annual income to afford the median apartment rent falling to $63,680—the lowest level since March 2022. This positive shift is driven by a combination of rising renter wages and a cooling rental market, largely due to a recent boom in apartment construction. Based on our experience assessment, this trend is creating more opportunities for tenants, though significant affordability challenges persist in several major metropolitan areas.
To afford the median monthly asking rent of $1,592 for a U.S. apartment, a renter needs an annual income of $63,680. This calculation uses the common standard of housing affordability, where rent should not exceed 30% of a household's gross income. The current required income is down 0.4% from a year ago and represents a substantial 6.4% drop from the August 2022 peak when a renter needed to earn $68,000.
This improvement coincides with strong wage growth for renters. The estimated median income for renter households in 2024 was $54,752, a 5.3% increase from 2023. However, a gap remains; the typical renter still earns about 14% less than the income needed for the median apartment, highlighting that affordability, while improving, is still a concern for many.
The landscape of rental affordability varies dramatically across the country. An analysis of 44 major metros reveals that renters in 15 of them earn more than the needed income for the median rent, a significant improvement from just seven metros a year earlier.
The most affordable rental markets are concentrated in the Sun Belt, where a recent construction boom has increased supply. The top five most affordable metros are:
Conversely, the least affordable markets are typically found on the coasts. The five metros with the largest income shortfalls are:
The year 2024 saw the most significant improvements in rental affordability in metros that experienced a high volume of new apartment completions. Austin saw the biggest gain, with the required income falling by 16.3% year-over-year. Other metros with notable improvements included:
In contrast, affordability worsened in several metros, primarily on the East Coast and Midwest, where new construction has been more limited. The largest increases in required income occurred in:
Based on our experience assessment, the data suggests several key trends for renters to consider. The gap between renting and buying a home is expected to widen further in 2025, with high mortgage rates and rising home prices making homeownership less accessible. This may lead many, particularly younger generations, to continue renting as the more affordable option.
For those seeking more affordable rent, targeting markets with recent construction booms, like many in Texas and Florida, can be a strategic move. However, it's crucial to research individual neighborhoods and factor in all costs of living. While the national trend is positive, renters should be prepared for a competitive market in less affordable cities, where high demand continues to push prices upward.
The key for renters is to focus on metros where wage growth is outpacing rent growth, creating a more favorable financial environment. The improvement in affordability is a welcome change, but careful financial planning remains essential.
