Homes for sale in short supply as there are now 30 renters for every home on the US market

The number of homes for sale per US renter household remains near record lows, highlighting the supply crunch facing first-time buyers in the current housing market.

Currently, there are about 30 renter households for every home available for sale, up from fewer than 10 in 2006, according to Freddie Mac’s latest market sentiment report.

The supply shortage dates back to the Great Recession, which dealt a major blow to new home construction. Since then, construction has picked up slowly but failed to keep pace with demand, resulting in a shortage of at least 1.5 million homes.

“Therefore, not only do people looking to buy their first home have to navigate an expensive market, but they also have to compete with more first-time buyers as supply continues to lag demand,” Freddie economists wrote Mac in the report.

Affordability also remains a major struggle for first-time buyers. The report found that between January 2000 and July 2024, cumulative entry-level prices rose 63% more than high-end home prices, meaning starter home prices are rising faster than the rest of the market.

“Less affordable housing is strongly felt by those looking to buy their first homes, particularly those without significant assets at their disposal,” the report said.

In addition to supply and affordability challenges, high mortgage rates have made the current market one of the most punishing in history for first-time buyers.

After falling in September, the average rate for 30-year fixed mortgages has risen for four straight weeks, reaching 6.54% for the week ending Thursday, according to Freddie Mac.

A recent survey by LendingTree found that more than half of renters fear the dream of home ownership is out of reach, with 62% saying they worry they’ll never be able to own a home.

Among renters who say they would rather own, cost is the biggest obstacle. Of this group, 65% say the cost of a down payment is keeping them from buying.

Also, 52% say home prices are too high in the areas where they live, and 39% say their credit score makes it difficult to qualify for a mortgage.

Despite the barriers to home ownership, the survey found that the dream of owning a home is widespread, with 83% of Americans saying they would rather own a home than rent.

Across all demographics, at least two-thirds said they would rather own a home than rent, including those making less than $30,000 a year (76%), those without children (77%) and Gen Z ( 79%).

But the survey found that the potential long-term financial benefits of home ownership were less important than the freedom and personal stability that comes with home ownership.

Asked why they prefer owning a home, 62% said they want the flexibility to do whatever they want with the space, while 61% said they value stability and not having to renew a lease.

In comparison, only 44% cited home appreciation as a reason to own, and 41% said they wanted to own a home to build wealth.

However, potential buyers should remember that the benefits of home ownership come at a cost. Renting remains cheaper than buying a starter home in many markets.

Tools such as Realtor.com®’s rent or buy calculator can help determine whether renting or buying a home makes more financial sense.