Cost Gap Between Buying and Renting Narrows

Redfin report shows income needed for typical home purchase is now 46% higher than for renting, down from 66% gap in 2023

Published on Feb. 12, 2026

Got story updates? Submit your updates here. ›

According to a new report from real estate brokerage Redfin, the affordability gap between renting and owning a home in the United States is closing. Americans now need an annual income of $111,252 to afford the typical home, compared to $76,020 needed to meet typical rental prices - a 46% gap, the narrowest in three years.

Why it matters

The shift reflects moderating home prices and soaring rental costs across much of the country, though homeownership remains out of reach for many Americans. The administration has announced measures aimed at cooling prices and expanding access to the housing market.

The details

Redfin's report found that the income needed to afford a typical home has dropped from $115,870 a year ago, when the comparable amount needed to rent was $74,464 - a 56% gap. This disparity peaked at 66% in late 2023, when a $120,609 income was required to buy versus $72,572 needed to rent. The gap is widest in San Jose, California, where buyers need to earn $374,241 annually, 175% more than renters need.

  • In December 2025, the income needed to afford a typical home was $111,252.
  • A year ago, the income needed to afford a typical home was $115,870.
  • In late 2023, the income needed to afford a typical home was $120,609.

The players

Redfin

A real estate brokerage and research firm.

Grishma Bhattarai

A Redfin economist who wrote about the report.

Got photos? Submit your photos here. ›

What they’re saying

“Many Americans have been hesitant to jump from renting to buying due to high homeownership costs, but the recent drop in mortgage rates and rise in homebuyer negotiating power may help some take the leap. We expect homebuying affordability to gradually improve in the coming year as mortgage rates stay closer to 6 percent than 7 percent, home-price growth loses steam and wages rise faster than housing costs.”

— Grishma Bhattarai, Redfin economist

What’s next

Redfin said that while rental costs have risen on a year-over-year basis, these have started to tick down monthly, and said that rental affordability 'could notably improve if current trends persist.'

The takeaway

The narrowing gap between the income needed to afford a typical home versus the income needed to afford typical rental costs suggests that homeownership may become more accessible for some Americans, though it remains out of reach for many due to persistently high prices.