Zillow Says Renting Saves $1,066 a Month vs. Buying

Renting remains less expensive than buying in every major US market measured by Zillow. The company’s August rent report puts the typical monthly rent at $1,948, compared with $3,014 for a new buyer’s mortgage payment, taxes, and insurance. That leaves a national gap of $1,066 per month, or $12,792 per year.

Renting Costs Less Across Major Metros

Buyer costs have been rising faster than rents. During the past six months, Zillow says the typical monthly cost for a new buyer increased $140. Typical rent increased only $32 during the same period. The spread now favors renting across all 50 of the country’s largest metros.

The difference is largest in expensive coastal markets. San Jose renters pay $7,883 less per month than new buyers. San Francisco follows at $5,413, Los Angeles at $4,441, and San Diego at $4,235. New York’s monthly gap is $2,629.

Even relatively affordable markets show a monthly advantage for renters. Pittsburgh’s gap was $536, while Birmingham’s was $668 and Memphis’ was $708. At the other extreme, Seattle renters saved $3,511 per month compared with new buyers.

The Details

Zillow also modeled what would happen if a renter invested the monthly savings at the August 2026 10-year Treasury yield of 4.68%. At the national $1,066 monthly difference, the first-year investment return would total $322. Assuming rents and ownership costs stayed stable, cumulative savings plus returns could reach about $72,000 after five years.

The analysis assumes a 30-year fixed mortgage with 10% down at a 6.67% rate on a typical home. It includes estimated taxes and insurance. Zillow notes that the comparison does not capture other ownership costs such as closing expenses and maintenance.

Zillow’s model produces especially large first-year investment returns in high-cost markets. A San Jose renter investing the monthly difference could earn about $2,381 in year one. The comparable figure in San Francisco is about $1,635.

Rent Metrics Still Vary Widely by Market

The typical US asking rent rose 0.2% in August and 2.5% from a year earlier. Multifamily rent reached $1,774, also up 0.2% for the month and 1.9% year over year. Since the pandemic began, Zillow says multifamily rents have increased 30.2%.

Annual multifamily rent growth was strongest in San Francisco at 11.6%, followed by San Jose at 7.7% and Virginia Beach at 7%. Meanwhile, 39.2% of Zillow rental listings offered concessions in August, up 2.5 percentage points from a year earlier.

Single-family rents were higher at $2,289 and increased 3% from a year earlier. They have risen 47% since the pandemic began. By comparison, overall rents are up 38.5% from the start of the pandemic.

Why It Matters

The affordability threshold is also diverging. Zillow estimates a household needs $77,919 in annual income to afford the typical rental. A typical new mortgage payment with 10% down requires more than $120,500. That rent-buy divide has widened as mortgage costs have outpaced rents.

The median household would spend 26.6% of income on a new rental in August, compared with 25.9% before the pandemic. New York remained the least affordable rental market at 40.6% of median household income.

Rental affordability varies sharply by metro. Austin, Raleigh, and Salt Lake City each required about 18.3% of median household income for rent. Miami required 36.9%, Los Angeles 34%, and San Diego 30.5%.

What’s Next

Zillow says the current gap could narrow if softer for-sale pricing and slower apartment supply growth work through the market. For now, renting remains the cheaper monthly option in all 50 major metros. The investment advantage in Zillow’s model also depends on renters actually saving the difference and on the assumed return. A slowdown in new apartment supply could also change the rental side of the equation.