Is Renting Smarter Than Buying in 2025? Latest Trends Show Rent Prices Falling While Mortgage Rates Remain High

Highlights to Know

• Median rents for 0-2 bedroom apartments have declined for 15 straight months, now $40 lower than their peak in August 2022.
• Average 30-year mortgage rates have risen to approximately 6.91%, nearing July’s levels.
• Renting currently offers a more affordable option compared to buying, though the best choice depends on your location and personal goals.

According to a recent Realtor.com analysis, median rents in the 50 largest U.S. metro areas dropped to $1,720 in October, down $23 from September and $40 below the August 2022 high. This marks the 15th month of declining rents, signaling a shift in the rental market.

Conversely, mortgage rates are climbing. The 30-year fixed mortgage rate averaged 6.91% as of the latest data, up over 1% since mid-September’s two-year low of 5.89%, based on Zillow’s mortgage rate statistics.

This creates a clear trend: renting is becoming more cost-effective while homeownership expenses rise.

Renting vs Buying: What Makes Sense Now?

Consider relocating to Atlanta, where the median rent for a 0-2 bedroom unit was $1,583 in October. Meanwhile, the median home price stood at $410,000. With a 20% down payment and a 6.91% mortgage rate on a 30-year fixed loan, monthly mortgage payments would be about $2,162, excluding taxes and insurance.

This means renting could save you roughly $579 per month, or nearly $7,000 annually, plus additional savings on property taxes, insurance, and upkeep. However, the home might offer more space than the rental.

What’s Ahead for Rent and Mortgage Rates in 2025?

Looking forward, rental prices are expected to continue falling due to a surge in new multifamily housing. With over 920,000 units under construction—50% above pre-pandemic levels—the increased supply should push rents downward next year.

Mortgage rates, however, remain unpredictable. Although the Federal Reserve cut interest rates twice recently, mortgage rates are more influenced by the 10-year Treasury bond yields, which have climbed following political developments.

If investor confidence in a potential second Trump term grows, Treasury yields and mortgage rates could rise further in 2025.

Ultimately, your decision to rent or buy hinges on your lifestyle priorities. Buying may suit those seeking stability and long-term roots, while renting offers flexibility and lower upfront costs. Use mortgage calculators and evaluate your financial goals before deciding.

How Mortgage Rates Are Calculated

The mortgage rates cited come from Zillow’s Mortgage API, assuming an 80% loan-to-value ratio and a credit score between 680 and 739. These rates reflect typical borrower experiences but may differ from advertised rates. © Zillow, Inc., 2024.

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