The median cost of housing for both U.S. renters and homeowners rose last year and while the share of income renters put toward housing was unchanged overall the degree to which households were cost-burdened varied by race, the Census Bureau said on Thursday.
More than 21 million renter households spent more than 30% of their income on housing costs in 2023, representing 49.7% of the renter households for whom rent burden is calculated.
Despite the jump in rental costs, the share of renter income spent on rent and utilities stayed at 31.0% at the median last year, unchanged from 2022, indicating renter household incomes kept pace with the rent increases. It may also be due to higher-income households becoming renters, the Census Bureau said.
Within Black or African American renter households, 56.2% paid more than 30% of their income on housing costs in 2023. About 54.7% of households defined as "Some Other Race" passed that threshold, compared to 46.7% of white renter households. Asian households were the least cost-burdened, the Census data showed.
Real median rental costs, defined as rent plus the average monthly costs of utilities once inflation is taken into account, increased 3.8% last year while real median home values rose 1.8%, according to the data released as part of the 2023 American Community Survey.
Every year between 2011 and 2019, real rental costs increased by less than 3.0%, the Census Bureau reported. Rent in 2022 grew 1.0%.
Census also said the cost of renting adjusted for inflation outpaced the rise in home values in 2023 for the first time in 10 years. While homeowners generally had a lower housing cost burden than renters, one key expense was insurance.
Between March 2022 and last July, the Federal Reserve increased its benchmark interest rate to more than 5% from near zero in order to bring down high inflation.
That in turn raised mortgage rates to their highest levels in roughly 20 years, putting a dent in the housing purchase market, with high interest rates sidelining buyers. With more people renting and overall inflation high, shelter costs last year shot up and continue to cause problems in bringing inflation fully back down to the U.S. central bank's 2% target rate.
While interest rates remained high, last year also saw the economy return to pre-coronavirus pandemic growth levels, job growth boomed, real household income rose and inflation eased to 2.6% by last December.
Source: reuters.com
