The average cost of rent, utilities and energy adjusted for inflation grew faster than median home values in 2023 for the first time in 10 years, the Census Bureau estimates. 

The federal agency reported this month that the 3.8% jump also marked the sharpest annual increase in rental costs since at least 2011. By comparison, the average value of a home rose by 1.8% last year after adjusting for inflation.

Nevertheless, the share of income spent on rent and utilities remained unchanged at 31% in 2023.

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“The fact that the gross rent share of income did not rise nationally and in most states despite significant increases in rental costs could be due to higher renters’ incomes or to an increase in higher-income households joining the population of renters,” said Jacob Fabina, an economist in the Census Bureau’s Social, Economic and Housing Statistics Division.

According to the Census Bureau, the average monthly housing cost for a renter rose from $1,354 in 2022 to $1,406 in 2023 after adjusting for inflation.

More than 21 million renter households spent over 30% of their income on housing costs last year, roughly half of 42.5 million renter households nationwide. 

The Department of Housing and Urban Development classifies these renters as cost-burdened.

The report comes as economists have warned that real wages are unlikely to keep up with rent in a tight housing market.

Vice President Kamala Harris, the Democratic Party’s presidential nominee, has made rent control a focus of her campaign.

Speaking at a rally in Atlanta last month, she pledged to “take on corporate landlords and cap unfair rent increases.”

Her words echoed a recent proposal from the Biden administration to limit rent hikes to 5% nationwide over the next two years for over 20 million apartments — a plan unlikely to pass the Republican-controlled House of Representatives. 

Former President Donald Trump, the Republican nominee and a real estate developer, opposes rent caps. He has instead proposed eliminating government regulations to lower construction costs.

Economists have long been divided on rent control. Most say the policy jacks up costs, limits housing supply and makes landlords less likely to repair rent-capped units.

“Whatever the housing problem, rent control is not the solution,” said Walter Block, a free-market economist teaching at Loyola University in New Orleans. “It drives investment funds away from residential units. That is the wrong direction to counter homelessness, rising rents, deteriorating housing, etc.”

According to the latest national data, home sales in the U.S. fell by 16% from 2022 to 2023 as more Americans opted to rent instead of buy.

“Most likely, this is due to high interest rates, with many people holding out for rate cuts,” said Christopher Calton, an expert on housing and the homeless at the free-market Independent Institute in Oakland, California. “This would explain why we are seeing a surge in renters, and why higher-income households are choosing to rent, assuming they see this as a short-term decision until interest rates improve.”

As rents rose last year, so did the nation’s homeless population. 

According to the National Alliance to End Homelessness, a record 653,104 people were homeless on a single night in January 2023, up 12.1% versus the previous year. 

The advocacy group noted that 63% of all homeless Americans live in seven states: California, New York, Florida, Washington, Texas, Oregon and Massachusetts.

Affordable housing advocates say more Americans turned to homeless services last year as increased competition for rental units helped drive up rates.

The National Housing Conference estimates that workers in 170 professions ranging from hospitality to clerical work couldn’t afford to rent a studio apartment in the District of Columbia last year.

“That’s going to drive homeless numbers,” said David M. Dworkin, the NHC’s CEO. “In other cities, like Los Angeles, there are parking lots full of people who live in their car or a tent, wake up and wash in a public restroom, and go to work every day. That’s just unacceptable in America.”

Mr. Dworkin said he was encouraged that Republicans and Democrats were focused on passing laws to address the issue.

According to some economists, real wages won’t be able to keep up with the pace of rent increases a year from now. Meanwhile, they cited high interest rates scaring off potential homeowners, rising home prices, shrinking pools of disposable income and government burdens on new construction and housing investments. 

“This trend is typical of inflationary periods and is driven by a constant depreciation of the currency,” said Daniel Lacalle, a professor of global economics at IE Business School in Spain. “Rents are rising faster because supply is limited and demand is rising.”