Rent or Buy in Late 2026? Here's How to Run the Numbers
With mortgage rates above 7 percent, home prices barely rising and more rentals sitting empty, renting is the cheaper choice in more places than it has been in years. Buying still wins if you'll stay put long enough.
The usual advice that renting is throwing money away doesn't hold up well right now. Three numbers explain why. Freddie Mac's average 30-year mortgage rate was 7.24 percent this week. The median existing home sold for $417,500 in September, the National Association of Realtors says, only 1.3 percent more than a year earlier, which is less than inflation. And the national rental vacancy rate rose to 7.6 percent in the third quarter, the Census Bureau says, giving renters more choices and more room to negotiate.
The fair way to compare is not rent against a mortgage payment, but rent against the costs of owning that you never get back. For a home at the national median price with 10 percent down, at today's rate, those add up roughly like this each month in the first year: about $2,260 in mortgage interest, $380 in property taxes, $175 in insurance, $155 in mortgage insurance, about $350 for maintenance at 1 percent of the home's value a year, and about $185 in lost interest on the roughly $53,000 you'd put into the down payment and closing costs instead of Treasury bills at about 4.2 percent. That's around $3,500 a month. If the home gains 1.3 percent a year, like the national median did this year, subtract about $450, which leaves roughly $3,050. These are our assumptions for illustration; taxes, insurance and maintenance vary widely by state and by house.
The rule of thumb that follows: if you can rent a comparable home for noticeably less than that figure, about $3,000 a month in this national example, renting is likely the cheaper choice for now, especially if you invest the difference. Where rents for similar homes are higher than that, buying starts to pay off. The total monthly check to own this example home, including principal, is about $3,620, so buying also takes more cash flow, even though about $300 a month of that builds equity.
Time is the other big factor. Buying and selling a home costs money, often 6 to 10 percent of the price once closing costs and selling commissions are counted, so the shorter your stay, the harder it is to come out ahead. A common rule is to plan on at least five to seven years, longer when prices are rising slowly. Buying makes more sense when you expect to stay a long time, have stable income and an emergency fund left after closing, and value the control and the fixed payment a fixed-rate mortgage gives you. Renting makes more sense when your job or plans could change, when local rents are low relative to prices, or when buying would empty your savings.
If you rent: with vacancies up, ask about a longer lease at today's rate, move-in concessions or a smaller increase at renewal, and read the lease for fees. If you're leaning toward buying, our guide to getting a mortgage at 7 percent and our mortgage payment calculator can help you test a budget. This is general information, not advice for your situation; a HUD-approved housing counselor can help you weigh it for free or at low cost.
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