3 in 5 Renters Choose To Keep Renting — The End of the Homeownership Dream?

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Here’s some news that might be surprising to some: Nearly 3 in 5 renters say they plan to keep renting next year, according to Zillow’s Consumer Housing Trends Report. Even if mortgage rates dropped, only 37% say they would buy, down from 45% last year. 

The shift from aspiring homeowner to committed renter signals a shift away from decades-old housing assumptions in American housing. For a growing share of Americans, renting is a deliberate choice that means you aren’t tied down to one property for long periods of time. 

Zillow predicts the lifestyle renter will emerge as a force in 2026. The data backs up this prediction with homeownership rates falling to levels not seen in years.

The Numbers Tell the Story

The homeownership rate was at 65% in the second quarter of 2025, making it the lowest level since late 2019, according to the Census Bureau’s Housing Vacancy Survey.

Ownership rates peaked two decades ago at 69.2% in 2004. Today’s rate trails that peak by 4.2 percentage points and remains under the long-term average of 66.3% measured over the past quarter century.

Younger Americans struggle when it comes to buying a home. Just 36.4% of household heads under age 35 own their homes. The 35-to-44 cohort saw ownership slip from 62.2% to 61%. Among the age groups tracked, the 45-to-54 bracket saw the biggest loss in ownership, falling 1.9 percentage points from 71.1% down to 69.2%.

The total number of homeowner households reached 86.2 million in the second quarter, which is a 0.1% decline from the prior year. Meanwhile, renter households grew to 46.4 million, posting a 2.6% increase during the same timeframe. 

Families Join the Rental Revolution

Parents with children under 18 make up 37% of renting households, climbing from 33% one year ago. As it turns out, Generation Alpha children influence nearly half their parents’ spending decisions, and housing choices follow that pattern. 

Translation? The stereotype of renters as young singles without kids no longer reflects reality. Families increasingly choose apartments and rental homes as their long-term housing solutions rather than temporary steppingstones to ownership.

Housing Market Stabilizes for Buyers and Renters

Zillow forecasts home values will grow 1.2% in 2026 following a roughly flat year in 2025. The number of major markets experiencing annual price declines should drop from 24 as of October to 12 markets next year.

More homeowners will continue building equity rather than watching their Zestimate fall below purchase price. Price stability benefits both current owners and potential buyers entering the market.

Existing home sales should reach 4.26 million in 2026, representing a 4.3% increase over 2025 totals. Years of constrained inventory and elevated mortgage rates created pent-up demand. Improving affordability will release some of that pressure as buyers return to the market.

Mortgage Rates Stay Elevated

Zillow puts itself on record predicting mortgage rates will remain above 6% throughout 2026. The forecast acknowledges difficulty in predicting rates a year ahead but relies on Zillow’s track record of accurately forecasting shelter inflation, which comprises 40% of the consumer price index.

Borrowers experienced some relief in 2025, pushing affordability to a three-year best. Gradual rate moderation should help additional buyers enter the market. Pandemic-era ultralow rates remain distant, but conditions continue improving from recent peaks.

Renters See Affordability Gains

Incomes outpaced rent growth in 37 of the 50 largest markets during 2025. A household earning median income would allocate 27.2% of earnings to typical rent as of October, the lowest percentage since August 2021. 

Zillow projects multifamily rents will climb just 0.3% in 2026. This minimal growth gives incomes additional opportunity to catch up and improve affordability further. Single-family rental homes face different dynamics, with rents expected to rise 2.3% as buyers delay purchases.

The Rise of the Intentional Renter

A growing share of Americans are choosing to rent not because they are locked out of homeownership, but because renting is a better fit with how they want to live. These renters are often financially capable of buying but opt out of ownership so they’re not tied down to one location (and don’t have to deal with the extra costs of maintaining a home). Career changes, remote work and evolving family needs make long-term commitments to a single property less appealing than they once were. 

The Housing Market Settles

The 2026 housing market should reach a healthier equilibrium, at least according to Zillow’s forecast. Buyers will have some breathing room because of modest affordability improvements and stabilizing prices. Sellers will like the price stability and more consistent demand.

Of course, neither renting nor owning is better. Both options serve different needs and priorities. And it’s important to note that the homeownership dream hasn’t died. It has evolved into something more nuanced where renting represents a legitimate long-term choice rather than a temporary situation to escape.

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