Askume, Sept 12 – Average housing costs for both U.S. renters and homeowners rose last year, with the proportion of renters’ income spent on housing generally staying the same but the cost burden on households continuing to rise, depending on the situation.
In 2023, over 21 million renter households will spend more than 30% of their income on housing expenditure, accounting for 49.7% of renter households whose rent burden has been calculated.
Despite the rising cost of rent, the share of renters’ income spent on rent and utilities averaged 31.0% last year, unchanged from 2022, indicating that renters’ household income has kept pace with rent increases. This may also be due to higher-income households becoming renters, the Census Bureau said.
In 2023, 56.2% of Black or African American renter households spent more than 30% of their income on housing costs. About 54.7% of households defined as “other races” exceeded this threshold, while 46.7% of white renter households exceeded this threshold. Asian households have the lowest costs, Census data show.
Real median rent costs (defined as average monthly utility bills and rent adjusted for inflation) rose 3.8% last year, while real median home prices rose 1.8%, according to data released by the 2023 American Community Survey.
The Census Bureau reports that the real cost of rent rose less than 3.0% annually between 2011 and 2019. Rents will increase by 1.0% in 2022.
The Census also says rental costs, adjusted for inflation, will surpass home price growth in 2023 for the first time in a decade. While homeowners generally have a lighter housing cost burden than renters, one major expense is insurance.
Between March 2022 and July last year, the Federal Reserve will raise its benchmark interest rate from near zero to above 5% to curb high inflation.
This has caused mortgage rates to reach their highest level in nearly 20 years, which has slowed the home buying market, with higher interest rates discouraging home buyers. Housing costs rose last year as more people rented and overall inflation increased, creating problems in fully returning to the Fed’s 2% target rate for inflation.
Although interest rates remain high, the economy returned to pre-pandemic growth levels last year, with job growth, real household income rising and inflation slowing to 2.6% in December.
