The development is a major change, as just this past January similar research discovered entry-level home ownership had a slight edge over renting in just over half the market.
The reason is twofold, according to the study.
While home rentals have and are continuing to see record-breaking prices — including an eighth-month stretch starting in June of 2021 when rent growth reached double digits for properties with two bedrooms or less — overall year-over-year rental growth has continued to fall.
June’s growth rate (14.1%), in fact, was the lowest so far this year, according to the report. It’s a benchmark that not only highlights a five-month skid from its peak at 17.3% in January, but it suggests that the rent surge apartment owners have been enduring the past two years may be starting to subside.
The second reason, which the site lists as the “biggest driver” for the market shift however, is that mortgage rates have spiked dramatically in the first half of the year. The average 30-year fixed mortgage rate, according to Freddie Mac, was 3.45% in January compared to 5.52% in June.
And higher financing rates make the median payment on a starter home more costly than on a comparable rental apartment.
Despite this news, apartment hopefuls still have a way to go before the market resembles what it was in years past, as rent remains 23.9% higher than it was in June 2020 and 27.6% higher than in June 2019.
Moreover, June’s median rent of $1,876 — which accounts for the 50 largest U.S. metropolitan area — is a new record level for Realtor.com data for the 16th consecutive month.