Rents Are Rising Faster Than Wages: Why Affordability Feels Tighter Than Ever

If it feels like rent is taking a bigger bite out of your paycheck than it used to, the data backs that up. New numbers show that rent growth has continued to outpace wage gains, making it harder for many renters to get ahead — especially those trying to save for homeownership.

Here’s what the latest reports reveal and why it matters right now.

Rent Growth Continues to Outrun Paychecks

According to a new Zillow report, U.S. rents have risen nearly 29% since April 2020, while single-family rental rents are up an even steeper 42.9%. As of April 2025, the typical asking rent nationwide sits at $2,024, reflecting a 3.4% increase year over year.

Wages, meanwhile, haven’t kept pace. Over the same period, wage growth has risen just 22.5%, leaving a growing gap between housing costs and income.

For renters, that gap translates into tougher trade-offs — higher monthly payments, less room to save, and delayed plans to buy.

Six-Figure Incomes Are Becoming the Norm in Some Cities

The affordability squeeze is most pronounced in major metro areas.

In several large cities, renters now need six-figure incomes just to keep rent below the commonly cited 30% of income threshold. New York tops the list, where renters spend 54.6% of median income on rent. Miami, Los Angeles, and multiple California markets follow closely behind.

Zillow also points out that monthly rent isn’t the only hurdle. Upfront costs — such as broker fees, security deposits, and multiple months of rent due at signing — create additional barriers, particularly in high-cost markets. These expenses make it even harder for renters to build savings for a future purchase.

Not All Rental Markets Look the Same

While many coastal and Sun Belt metros remain expensive, some markets continue to offer relative relief.

Cities like Austin, Minneapolis, Raleigh, and Salt Lake City stand out as more affordable rental markets, where rent typically consumes less than 21% of median income. These areas benefit from a combination of stronger income growth, increased housing supply, and more balanced demand.

For renters with geographic flexibility, these differences can be meaningful.

A Volatile Week in the Bond Market Adds Another Layer

Housing affordability doesn’t exist in a vacuum — it’s closely tied to interest rates, which were anything but calm this week.

Bond yields moved sharply as markets reacted to a mix of economic data, Fed commentary, and global developments:

• The week began with a spike in rates tied to optimism around U.S.–China trade progress
  
• Midweek, yields eased after weaker retail sales data and a more dovish tone from Fed Chair Jerome Powell
  
• Friday initially favored bonds, but sentiment shifted after consumer surveys showed the highest inflation expectations since 1981
  
• Late Friday, Moody’s downgraded the U.S. credit outlook, pushing yields higher in the final minutes of trading
  

While the downgrade caused a noticeable move, it was still modest compared to the sharp volatility seen earlier this year.

What This Meant for Mortgage Rates

Because the late-week jump happened so close to the market close, mortgage lenders had limited time to adjust pricing. As a result, 30-year fixed mortgage rates ended the week slightly higher than Thursday’s levels, but still below the midweek peaks.

This kind of volatility highlights why mortgage rates can feel unpredictable from day to day — and why timing alone is rarely a reliable strategy.

The Bigger Picture

Rents rising faster than wages continue to put pressure on affordability, particularly for households trying to transition from renting to owning. At the same time, financial markets remain sensitive to economic data and global events, creating short-term swings in borrowing costs.

For renters and buyers alike, the path forward increasingly depends on understanding the full picture — income trends, local housing costs, and financing options — rather than relying on any single headline.