While many say it’s a better financial idea to buy a home rather than rent one, new data shows it’s becoming less of an option for many Americans. A new Bankrate study shows it’s cheaper to rent in the country’s top 50 largest cities.
According to the numbers, over the last year, average mortgage payments, which include principal, interest, insurance and property taxes, increased while rents declined or stayed steady.
According to Redfin, as of February 2025, the average mortgage for a median-priced home rose 2.4% year over year. The cost of a median-priced home in the U.S. is $425,583; the mortgage for that would be $2,768.
Compare the mortgage cost to rent, which Redfin stated averaged at about $2,000. According to Bankrate, an average mortgage payment costs 38% more per month than the average cost of rent.
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Location plays a big role in affordability
Of course, they say, it’s all about location. San Francisco has the widest gap between renting and buying, costing homeowners nearly 191% more per month to pay their mortgage.
The study found the largest gaps between renting and buying, mostly in coastal cities. So, renting in California’s larger cities such as San Francisco, San Jose, Los Angeles and San Diego is actually cheaper. It’s also cheaper in places like Seattle, Denver, Salt Lake City, Austin, Texas and Dallas.
In the Rust Belt, buying may be the better deal
The cities where it’s cheaper to buy than rent are found in the Rust Belt: Detroit, Pittsburgh, Philadelphia, Cleveland, Tampa, Florida, Cincinnati, Chicago, Indianapolis, St. Louis and Grand Rapids, Michigan, according to the study.
First-time buyers still struggle to break in
Higher-priced homes and a lack of supply have made it increasingly difficult for young Americans to enter the housing market over the last few years.
So, if someone is thinking about buying versus renting, which is the best option?
Daryl Fairweather, Redfin’s chief economist, said people need to ask themselves if they plan to live in the area for a longer period of time.
“You should buy when you’re ready to settle down. It’s kind of cliché, but it’s true,” she said in a statement. “If you’re going to stay in the home for more than five years, that’s when you have built up enough equity where it becomes worthwhile. There are high transaction costs to buying and selling homes because of real estate fees and taxes, so you want to make sure you’re ready to stay there for the long haul.”
Joel Berner, a senior economist with Realtor.com, said prospective buyers should ask themselves if they’re prepared for a long-term investment.
“Households working on their budget will find it much easier to continue to rent than to go through the expenses of homeownership. However, they need to consider the equity and generational wealth they can build up by owning a home that they can’t by renting it,” Berner said. “In the long run, buying a home may be a better investment even if the short-run costs seem prohibitive. We’re starting to see buying conditions improve, which will be a good opportunity for those right on the margin of purchasing their first home.”
