U.S. Housing Costs Rise for Renters and Homeowners, With Disparities by Race
The median cost of housing for both renters and homeowners in the U.S. increased in 2023, though the share of income renters dedicated to housing remained steady overall, according to a report from the Census Bureau released on Thursday. However, the extent to which households were financially burdened by housing costs varied significantly by race.
More than 21 million renter households spent over 30% of their income on housing in 2023, accounting for 49.7% of all renter households for which rent burden data was calculated.
Despite the rise in rental costs, the median share of income spent on rent and utilities stayed at 31.0% last year, unchanged from 2022. This stability suggests that renter incomes increased in line with rising rents. Additionally, the Census Bureau noted that higher-income households may have contributed to this trend by entering the rental market.
Housing cost burdens varied significantly across racial groups. In 2023, 56.2% of Black or African American renter households spent more than 30% of their income on housing costs, compared to 54.7% of households categorized as “Some Other Race,” and 46.7% of white renter households. Asian households were the least cost-burdened, according to the Census data.
Real median rental costs, which include rent and utilities adjusted for inflation, increased by 3.8% last year, while real median home values rose by 1.8%, according to data from the 2023 American Community Survey.
From 2011 to 2019, real rental costs increased by less than 3.0% annually, with rents rising by only 1.0% in 2022. However, in 2023, rental costs outpaced the rise in home values for the first time in a decade. While homeowners generally faced a lower housing cost burden than renters, rising insurance costs became a significant expense for homeowners.
The Federal Reserve raised its benchmark interest rate from near zero to over 5% between March 2022 and July 2023 in an effort to combat high inflation. This led to mortgage rates reaching their highest levels in about 20 years, cooling the housing purchase market and sidelining many potential buyers. As more people turned to renting and inflation remained elevated, shelter costs surged in 2023, complicating efforts to bring inflation back to the Federal Reserve’s 2% target.
Despite the high interest rates, the U.S. economy returned to pre-pandemic growth levels last year. Job growth was strong, real household income increased, and inflation had eased to 2.6% by December 2023.
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