New First American data reveals where homeownership still beats renting in 2025
Renting now makes more financial sense than owning in most US markets, but that’s not the whole story. First American deputy chief economist Odeta Kushi examined the rent vs. own decision with new data from Q2 2025 and found that it varies significantly by location, and in nearly a third of the nation’s top 50 markets, owning still comes out ahead when home equity is factored in.
“To rent or to own? That is the question,” Kushi wrote in a commentary. “Amidst headlines that the rents are ’too darn high’ and elevated mortgage rates that make owning a home seemingly out of reach, it can be confusing. Today’s housing market has complicated this classic choice.”
The latest reading from the Fannie Mae Home Price Index (FNM-HPI) showed that home price growth is decelerating. Single-family home prices rose 4.1% from Q2 2024 to Q2 2025, down from 5.0% growth in the previous quarter. On a quarterly basis, prices increased just 0.3% when seasonally adjusted, and 2.0% unadjusted.
“This continues the general moderation in home price growth observed since the start of 2024,” Fannie Mae noted in its report.
At the same time, rent growth has eased below its pre-pandemic average. While buying a home historically builds wealth through appreciation, today’s elevated mortgage rates and softer price gains are narrowing that advantage.
“From 2012 to 2022, strong house price gains meant owning made more financial sense nationally,” Kushi said. “From a cumulative perspective, a recent First American analysis showed that for someone who purchased a home 10 years ago, which is approximately the average tenure length for a homeowner in the US in recent years, the wealth-generating benefit was nearly $225,000, because house prices had not declined annually over those ten years. A renter over that same period cumulatively lost $148,000.
“Now, in our latest data from the second quarter of 2025, even after accounting for potential equity gains from appreciation, renting makes more financial sense nationally and in most places. In fact, the national difference between renting and owning, after accounting for potential equity gains, is the highest we’ve seen since 2011.
“However, real estate is intensely local, and whether it’s smarter to rent or buy depends heavily on the market.”
First American’s analysis compared the full monthly cost of homeownership (including mortgage principal and interest, property taxes, insurance, and maintenance) with local median rents. After also factoring in the equity potential from annual home price appreciation, renting emerged as the better option in 36 of the top 50 U.S. markets.
Yet in 14 metro areas, the benefits of ownership still outweigh renting – once expected equity gains are included. These markets include:
- Louisville, KY (+$503 ownership advantage)
- Hartford, CT (+$473)
- Buffalo, NY (+$465)
- Pittsburgh (+$435)
- Milwaukee (+$405)
- Detroit (+$350)
- Cleveland (+$348)
- Philadelphia (+$324)
- Richmond, VA (+$268)
- Baltimore (+$219)
- Chicago (+$217)
- Cincinnati (+$115)
- Birmingham, AL (+$111)
- Virginia Beach, VA (+$89)
Appreciation effectively “pays down” part of homeownership costs in these cities, according to Kushi. For example, Baltimore’s estimated monthly ownership cost is $2,355. But with house prices rising at 4.1% annually, equivalent to $914 in monthly equity gains, the net cost of owning drops to $1,440, which is below the local median rent of $1,660.
Meanwhile, in high-cost, high-volatility markets like San Francisco, owning carries steep downsides. With prices falling 6% year-over-year, a typical monthly mortgage cost of $6,305 inflates to a net $10,000 once lost equity is factored in, far above the city’s median rent of $2,500.
The same effect is playing out in other pricey metros where price declines have turned what was once a long-term wealth-building strategy into a financial drag for recent buyers.
Ultimately, Kushi said both paths come with trade-offs. Renting offers flexibility and lower upfront costs, while owning still delivers long-term equity and payment stability.
“House price trends aren’t static, so this type of analysis is meant to help frame the decision to rent or buy, not settle it,” Kushi said. “Right now, renting looks more financially prudent in many markets, as ownership costs remain high and equity benefits have slowed.
Read next: What's in store for US home prices and interest rates in 2025?
“Still, owning a home comes with forced savings and the security of stable monthly principal and interest payments—powerful advantages in an inflationary world. Not to mention, over a longer period, the cumulative benefits of house price growth outweigh the costs of paying rent. Meanwhile, renting offers the freedom to relocate without the costs of buying or selling, and the simplicity of leaving maintenance to someone else.
“At the end of the day, the choice comes down to lifestyle: whether you prioritize flexibility or stability, short-term savings or long-term equity, mobility or putting down roots. It’s a deeply personal decision—only you can determine which path is right for you.”
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