Fewer renters are falling behind on payments, but their financial stress might be growing in other ways

Most renters in the US are staying current on their rent payments, but more are cutting back in other areas to keep up, according to data from the Federal Reserve Bank of Philadelphia. 

As of January, only 1 in 5 renters reported being unable to pay their rent on time or in full recently, down from around 1 in 4 in late 2024 and early 2025. But nearly two-thirds reported they were cutting back on spending in other areas, up 6.4 percentage points from a year earlier. 

And over a quarter of renters reported skipping debt payments or other monthly bills, up 4.6 percentage points from 2025. A larger share also said their financial security had declined in the last year, compared to those surveyed a year earlier. 

The evidence of brewing financial strain for renters comes as oil prices remain elevated, sending the cost of basics like groceries surging. Annual inflation surged to 4.2% in May, largely due to higher oil prices stemming from the Iran War. 

Renting remains a budget burden for many. The Philadelphia Fed estimates that earlier this year, more than half of all renters were rent-burdened, meaning they spend 30% or more of their gross income on rent. And nearly 28% qualify as extremely rent burdened, spending more than half their gross income on rent. 

Renters reported higher rates of cutting back on spending or skipping bills than their homeowner counterparts, and more are doing so now. 

"Notably, renters were the only group to report an appreciable year-over-year increase to either coping strategy," Tom Akana, Matthew Drayton, and Lauren Lambie-Hanson wrote in the Philadelphia Fed's report. 

Read more: What credit score do you need to rent an apartment​?

Renters with student loans and those who make moderate incomes are particularly likely to be cutting back on spending now. The percentage of renters with student debt who report they're reducing their spending rose nearly 12 percentage points to around 73%, and the share of renters who earn $60,000 to $120,000 annually and are now cutting back increased 13.1 percentage points to nearly 60%. 

Plans to take out a mortgage in the coming months — a proxy for future homeownership intentions — are also on the decline as mortgage rates remain above 6%. Many of the renters whose ages and incomes most closely match the demographics of potential homebuyers are driving that shift. 

The intent to take out a mortgage among renters making over $120,000 a year plummeted to just 10.5% this year, from 44.5% a year earlier. And just 9% of 18-to-35-year-olds — a typical first-time homebuyer demographic — say they're making plans to get a mortgage in 2026, down from 24% in 2025.