Fewer Americans Are Buying Homes–What Are They Doing Instead?

Morning Consult’s Housing Affordability report found a couple of clear takeaways: First, for most consumers who don’t own a home already, buying one in the current market is generally out of reach financially; and secondly, those who do own homes have a strong incentive not to sell them. For most homeowners, putting their house on the market would mean trading in a low interest rate and a smaller mortgage for a higher interest rate and more expensive mortgage. Though rising prices have benefitted those living in owned homes, the prospect of taking on a larger monthly payment–mostly tied to higher financing costs on a new mortgage–thus remains a significant barrier.  

The obstacles of unaffordability and “golden handcuffs” of locked in rates from years past are combining to paralyze existing home sales. For would-be buyers who aren’t buying and would-be sellers who aren’t selling, this market gridlock is exacerbating pent-up homebuying demand. Morning Consult’s survey of 4,400 U.S. adults on housing affordability sought to evaluate this dynamic, and how it is impacting consumer behavior as many seek alternative solutions to homebuying to meet their housing needs. 

Renters are locked out of homeownership by costs, not preference

Most non-homeowners are renters; with 43% of respondents in last month’s housing survey saying they rent their current home. As reported in our U.S. Housing Affordability report, this share has been rising in recent years as rising prices and interest rates discourage prospective homebuyers. Data from last month’s housing survey suggests this trend is being driven by financial necessity rather than by choice: Current renters are about twice as likely as homeowners to say they are interested in moving in the next 6 to 12 months, and among that groups, 61% say their ideal next housing move would be to purchase a house or condo.

With so many renters expressing a desire to buy a home, what is holding them back? Unsurprisingly, the primary factor is unaffordability, which stands out as the top reason cited for why renters say they haven’t yet bought a home. 

Not only is cost a current barrier, but it looks likely to remain a hurdle for renters for some time due to the relative lack of savings and other assets possessed by most renters, putting a down payment out of reach. About two thirds of renters surveyed said their household probably or definitely does not have enough money saved to afford a 20% down payment on a home in their area, compared with half of mortgage-holders and 40% of homeowners without a mortgage. Renters tend to be younger and less wealthy than homeowners, and in most cases do not have homeowners’ equity to cash in on. Consequently, there is a large discrepancy in the amount of money renters expect they’d be able to pull together for a down payment compared with homeowners.

Unlike locked-in mortgage payments, renters face recurring increases in housing payments–but can also trade down more easily

Over time, the decision to rent or own a home has important implications for household finances, with each option bringing potential benefits and drawbacks. A key benefit to owning is the ability to earn homeowners equity over time; an owned home is not only an entity serving the purpose of providing shelter, but also an investment and store of value. Renters’ payments cannot be recouped. 

The fixed nature of most mortgage terms is another key differentiator. Those living in purchased homes will typically face a set interest rate for the duration of the loan–usually up to 30 years. Aside from fluctuations in taxes and insurance from year to year, monthly payment amounts will hold steady throughout this period–potentially locking in a monthly cost level that is vastly different from what the current market might yield for the same property. Renters, meanwhile, almost always have much shorter lease terms: 71% of renters surveyed said their lease term is one year or less.

Shorter lease terms mean rents are more able to “float” in line with market conditions compared with mortgages, a double-edged sword depending on market conditions. On the one hand, landlords for the most part (excluding the few subject to restrictive rent control laws) can raise rents for tenants each time they renew their lease, and will often do so if market prices are rising. Conversely, when market prices are falling or new supply is coming online, as was the case in certain geographies over the past couple of years, renters with expiring leases can potentially trade down to less expensive housing options. The switching costs are minimal compared to homeownership: Homeowners seeking to move often need to grapple with mortgage approvals, inspections, and contingencies for both the home they want to buy and the one they want to sell. Renting is thus more flexible than homeownership and can potentially enable cost savings, conditions permitting. 

So, which method is more financially beneficial overall? The answer depends on both individual and market conditions. Notably, and despite adults’ overall expressed preference for owning homes, renters and buyers do not agree on which method offers the “best deal”, with each group tending to favor their current solution.

As high rates keep sellers on the sidelines, homeowners seek to upgrade spaces rather than move

Despite homeowners' conviction that buying is preferable to renting, few are currently making purchases. Far fewer current owners express interest in moving in the nearterm than renters, and the monthly share reporting they did move in Morning Consult’s monthly tracking surveys remains subdued. These reports are consistent with historically low turnover in existing home sales.

Morning Consult’s U.S. Housing Affordability report detailed how reluctance to move is being driven by higher interest rates and home prices–each of which would factor into a higher monthly payment amount than many who bought homes several years ago in more favorable conditions are paying now. However, just because a homeowner chooses to stay locked in on their mortgage does not mean their housing preferences aren’t changing over time. Rather than moving, more owners are turning to home improvements to meet their household’s evolving needs.

Among U.S. respondents, Morning Consult’s survey found that homeowners with or without mortgage payments were much more likely to say they started at least one home improvement project in the past month compared with renters. Income plays a role as well, with just over half of high income adults undertaking home improvement projects compared with only 22% of lower income adults.

More current homeowners turning to home improvement may be a symptom of the gridlock currently affecting the housing market, but this trend may also have important future implications of its own–including for pricing and affordability. Upgraded spaces may reduce some of the urgency to move for homeowners that might previously have harbored interest in switching homes–exacerbating the ongoing supply issue from relatively few sellers. At the same time, home improvements will typically increase the value of a home; those that upgrade and still do want to sell will expect a higher price tag in return. Home improvements may therefore become yet another facet of the housing market perpetuating the unaffordability problem in the nearterm, driving an ever-widening wedge between the average American and the possibility of buying a home.

Unless otherwise noted, Morning Consult data for this analysis comes from a survey conducted between 2024-08-09  and 2024-08-12 among a representative sample of 4,414 U.S. adults. All survey interviews were conducted online, and the  data were weighted to approximate populations of adults based on age, gender, race, educational attainment, region, gender by age and race by educational attainment.

Additional data points come from:

U.S. Consumer Spending Tracker

U.S. Inflation and Supply Chains Tracker