Elevated mortgage rates are driving up demand for rental homes in the Philly region and nationally
Mortgage rates are stifling home-buying.
As the average interest rate for the popular 30-year, fixed-rate mortgage neared and then jumped past 7% in September, more people showed interest in renting across the country and the Philadelphia region, according to a Zillow report.
In the Philadelphia metropolitan area, rental demand on Zillow.com — measured by views, shares, and saves of listings — rose 13% compared to last September, when mortgage rates were roughly 1 percentage point lower.
“Elevated mortgage rates have pushed home shoppers straight into the arms of rentals,” Kara Ng, senior economist at Zillow, said in a statement.
From September 2025 to this September, the typical asking rent in the Philadelphia region grew roughly 3% to $1,903. Over the same period, a homebuyer’s typical housing payment grew about 6% to $3,335.
That housing payment includes the principal, interest, property taxes, and insurance. It assumes the buyer made a 10% down payment on a 30-year, fixed rate mortgage at the average September rate of 6.86%.
Zillow included both single-family and multifamily rentals in its calculation of typical asking rent.
Ng said that “with the rise in borrowing costs, we’re seeing the rise of the deliberate renter, someone who chooses to bank the difference between a buyer’s monthly payment and rent and build wealth without owning a home” through saving and investing.
A growing number of households also are being priced out of the for-sale housing market.
To comfortably afford a typical rental, a Philadelphia-area household needs to make about $76,000, according to Zillow. To buy the typical home valued at about $387,000, a household needs to make roughly $133,400 per year, about $57,000 more than renters.
How the Philly area compares
The gap in the income needed to afford to buy vs. rent is bigger in the Philadelphia area than nationally.
Across the country, a household needs to make about $77,300 to afford the typical rental and about $121,500 to afford to buy the typical home. That’s a gap of about $44,000.
Nationally, the typical rent is about $30 higher per month than in the Philadelphia area. The typical monthly payment for homebuyers is $300 lower.
Rental demand on Zillow.com nationally was up 19% from last September.
Among major metro areas, San Jose, Calif., was where demand increased the most from last year — 82.5%.
San Francisco; Austin, Texas; Miami; and Phoenix round out the top five markets with the highest increases in rental demand.
The Baltimore, Washington, Cleveland, and Louisville, Ky., areas were among the metros where rental demand decreased since last year.