Nearly two in five (38%) U.S. renters don't believe they'll ever own a home, up from roughly one-quarter (27%) less than a year ago

Nearly two in five (38%) U.S. renters don't believe they'll ever own a home, up from roughly one-quarter (27%) less than a year ago, per Redfin.

Lack of affordability is the main reason many renters doubt they will become homeowners. Nearly half (44%) of renters who don't expect to buy a home soon cite high home prices as the primary obstacle. Other common hurdles include the ability to save for a down payment (35%), afford mortgage payments (33%), and cope with high mortgage rates (32%). About one in eight (14%) simply have no interest in owning a home.

This information comes from a Redfin-commissioned survey conducted by Qualtrics in February 2024, which included responses from roughly 3,000 U.S. residents, about 1,000 of whom are renters.

The dream of homeownership is becoming increasingly unattainable for many Americans due to the combination of high home prices and mortgage rates. First-time homebuyers now need to earn approximately $76,000 to afford a typical U.S. starter home, an 8% increase from last year and nearly double the amount needed before the pandemic, according to a recent Redfin analysis.

Home prices have increased by 7% over the past year, and monthly mortgage payments have risen by more than 10%. This escalation explains why more renters today feel they won't be able to purchase a home anytime soon.

Many renters struggle with their current housing costs, making homeownership seem even more out of reach. Nearly one-quarter (24%) of renters regularly have trouble affording their housing payments, and an additional 45% sometimes struggle.

Rents have surged in recent years due to increased demand during the pandemic. The median U.S. asking rent is about $2,000, near the record high reached in 2022. However, the rate of rent increase has slowed, partly because new apartment supply is easing price pressures.

“Housing costs are high across the board, but renting is a more affordable and realistic option for many Americans right now—especially those who have never owned a home and aren’t able to tap into equity from a previous sale,” said Redfin Chief Economist Daryl Fairweather. “While owning a home is usually a sound long-term investment, the barriers to entry and upfront costs of buying are higher than renting. Buying typically requires a sizable down payment and approval for a mortgage—things that are difficult for many people today, when the typical down payment is near $60,000 and mortgage payments are sky-high. The sheer expense of purchasing a home is causing the American Dream of homeownership to lose some of its shine.”

Gen Z renters are the most optimistic about becoming homeowners. Only 8% of Gen Z renters believe they’ll never own a home, compared to 22% of millennials, 40% of Gen Xers, and 81% of baby boomers. This optimism among Gen Z is understandable as they are in the early stages of their careers and have more time to eventually purchase a home. In contrast, older generations, especially baby boomers, may have previously owned a home and now prefer the convenience and low-maintenance lifestyle of renting, or they may be on a fixed income.