A new market report highlights the impact of soaring housing prices and elevated mortgage rates on the U.S. housing landscape:

 

The average age of homebuyers in 2024 was 56, a record high. The median age of first-time buyers went from 35 to 38. And the share of first-time buyers dropped from 32% to 24, the lowest percentage since the organization began tracking the stat in 1981.

 

In this environment, more and more people are opting out of homeownership and turning to renting as an attainable and attractive housing solution. Here’s why.

 

There’s more flexibility in renting

 

First-time buyers today are navigating a challenging market. At the core of the issue is low inventory. After a decade of underbuilding in the 2010s, the national housing shortage is well-documented and estimated to be in the millions, with demand far outpacing demand.

 

As a result, home prices and mortgage rates have both risen steadily, increasing monthly housing costs and making it difficult to save for a down payment. The report found that the median price for a new home across the U.S. is $435,000, a 39% increase since 2020. National interest rates are hovering around 7% for 30-year mortgages.

 

That means a 20% down payment on a house to avoid paying private mortgage insurance will cost $87,000—more than many households make in a year, and much more than the average American is able to save, especially with today’s high inflation. Add in those high interest rates, and that’s a lot to spend within the first year of homeownership.

 

Even a 3% down payment, usually the minimum a seller accepts, would cost $13,050. Coupled with taxes and HOA fees on top of student debt, auto costs, and other loans, that could still be a pricey ask of some buyers.

 

Within the limited pool of available homes, first-time buyers also compete with wealthier individuals who can more easily qualify for mortgages. Chief among them are existing homeowners who, as CBS reports, “have built up equity during the past two years of rising home prices and who therefore have more money to spend on housing.”

 

These buyers already own one or more homes and have equity to purchase new ones. Perhaps they’re looking for a new vacation home, or want to see what life is like in another location. Whatever the case, long-term homeowners can use their existing equity to make cash purchases or large down payments on new homes, outbidding first-time buyers.

 

In this constrained environment, renting has emerged as a quality housing option that offers more opportunity, access, and financial flexibility.

 

For one, renting offers less rigid terms. There isn’t a 30-year contract that you’re stuck with even if interest rates change. A security deposit, if there is one at all, represents a one-time cost. You know what you’re paying each month, and you’re not surprised by HOA valuations that suddenly increase mortgage payments.

 

And what about getting a job or relocating to a new city? Homeowners have to find a buyer for their current home—which comes with additional selling costs—while bidding for a new place to live elsewhere, with no guarantee of being selected. Renting eliminates those issues, making the financial advantages of renting one of its greatest draws today.

 

Hybrid work environments make renting more attractive

 

During the pandemic, many companies shifted to a work-from-home model. Yet, in the years since, businesses have seen the value of in-person interaction. As a result, there’s been a more substantial shift to a return to the office, whether full-time or on a hybrid basis.

 

According to ResiClub, the share of fully remote U.S. workers has fallen in 39 of the 40 largest markets over the past two years—from nearly 18% in 2021 to just under 14% in 2023. But WFH isn’t going back to 2019 levels, which previously stood firmly below 6%. 

 

Instead, the hybrid model is what employees increasingly expect. According to a recent report from Gallup, 60% of employees would prefer a hybrid model, with 55% of respondents expecting that to be the long-term solution for their companies.

 

Whether a business has one central office or multiple locations around the nation, a formerly remote worker may have to relocate. They might look for nearby housing options, outside of a major city. For example, someone whose company has an Austin HQ may find living in a suburb like Kyle or Manor more affordable and a better option, particularly if going into the office is only required once or twice a week.

 

A renter could also choose a home a little further away from the office if that neighborhood meets their needs for schools, activities, transit, or another priority. A rental home may also have the perfect room for an office that gets natural light and the space for a sleek new desk.

 

Should they get another job or decide to relocate within the metro area, it’s a lot easier for a renter to pack up boxes and move. And if it’s the type of job that requires traveling for months at a time to work on a specific project, renting can create a nice home base.   

 

The home rental network in 2025 is extensive

 

There are approximately 49.5 million homes available for rent in the U.S. The ones owned by professional rental companies are often backed by an extensive network of talent. That translates into benefits for renters, like property management and maintenance support powered by a broad base of employees, vendors, and suppliers.

 

Professional rental companies and build-to-rent developers are also tuned into trends in the housing market. Years of industry expertise and customer insights can lead to feature upgrades and layout refinements, giving renters access to housing that reflects real-time preferences and needs.  

 

Working with a rental company can also help first-timers with the overwhelming parts of finding a new home. They have extensive knowledge of neighborhoods, are familiar with the homes available, and know how the process works and the pitfalls to avoid.     

 

Professional rental companies are typically looking to improve the market for people searching for homes. Rather than building or buying homes in a neighborhood to re-sell at a higher price, they offer an attainable solution through home rentals.

 

These solutions give residents a great alternative to homeownership. Forget taking on debt by putting together a down payment or worrying about fixing maintenance issues as they arise. Those who rent their homes can enjoy benefits like ample space, yards with decks and patios, and a cozy neighborhood feel without some of the more common headaches that homeownership provides.

 

These homeownership trends will likely continue well into the coming years, making renting a viable and attractive option, especially for first-timers. It’s even more beneficial when you team up with a partner who can simplify your life at home.

 

AMH has delivered more than 10,000 homes in nearly 200 communities through our build-to-rent program, and we’re continuing to create reliable solutions so more people can comfortably live in homes. Ready to see what the future of American housing looks like? Visit our communities here.