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By Giulia Carbonaro
Senior Reporter
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The number of working-age adults struggling to pay rent climbed last year amid rising costs for housing and other essential expenses, according to a new analysis by Urban Institute researchers, with middle-income renters facing the biggest increase across all households.
While lower-income households were the most likely to report challenges paying rent last year at 27.8 percent, up from 26.4 percent in 2024, the share of middle-income renters struggling saw a huge jump in the space of 12 months, going from 14.3 percent in 2024 to 21.6 percent in 2025.
The study was based on data from the Urban Institute’s Well-Being and Basic Needs Survey (WBNS), a nationally representative annual survey last fielded in December 2025.
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The findings represent yet another blow to the American middle class, for which many traditional life milestones reached relatively easily by their parents—like homeownership, kids and marriage—feel increasingly out of reach.
A July survey from Primerica, a financial service company, found that 71 percent of middle-income Americans believed their income could not keep up with the cost of living, 66 percent said they had little to no wiggle room in their budgets, and more than half had stopped saving for the future.
The reason why middle-income households have seen such a big jump is that costs have been increasing across the board, Kathryn Reynolds, one of the authors, told Newsweek. "You’re seeing increases in food costs and gas prices and utilities, and, honestly, I think people are just starting to be squeezed," she added.
No Real Break from the Affordability Crisis
Housing represents the single largest monthly expense for most families in the U.S., taking up an average of 33.4 percent of total consumer expenditures, according to the Bureau of Labor Statistics. Over the past few years, the cost of housing has skyrocketed for both homeowners and renters, fueled by the nation’s shortage of affordable units.
After historically high rent increases between 2021 and 2022, rent growth has slowed down significantly and even declined for the first time last year, according to the Harvard’s Joint Center for Housing Studies (JCHS), but prices remain much higher than before the pandemic.
In 2024, the latest data mentioned by JCHS, the number of cost-burdened renters in the U.S. reached a record high for the fourth consecutive year, at 22.7 million renter households. Some 12.1 million renter households were severely burdened.
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This is showing up in Urban Institute’s research about renters falling behind on payment and being unable to cover other expenses. The number of renting households struggling to pay rent had remained surprisingly "static" during the pandemic years, Reynolds said. "And then in 2025 we saw an increase, the first kind of significant increase in the measure since we started reporting on it. It jumped up to one in five renter households."
Overall, researchers found that 20 percent of renters aged between 18 and 64 reported that they did not pay the full amount of rent or were late with a payment at some point in 2025, up from 16.5 percent a year earlier.
Among older renters, aged 65 and above, nearly one in ten (or 8.9 percent) reported problems paying rent last year.
From a regional perspective, the share of renters having difficulty paying rent was higher than in previous years across the Northeast, Midwest, and South census regions in 2025.
The share of renters struggling to pay rent went from 15.9 percent in 2024 to 19.8 percent in 2025 in the Northeast and from 19.4 percent to 19.7 percent in the Midwest, two regions where the affordable housing shortage remains most acute.
In the South, 23.3 percent of renters reported challenges paying rent last year, up from 15–17 percent in each year between 2022 and 2024. In the West, 15.7 percent of renters struggled to pay rent last year, about the same as in the previous four years.
Costs Are Piling Up for American Renters
Monthly expenses are piling up on American renters, making it harder to pay for other goods and services as well. According to the Urban Institute study, around 13 percent of working-age adults had problems paying bills for gas, oil and electricity in 2025—similar to the shares reported in 2023 and 2024 but much higher than those reported between 2020 and 2022.
Since then, energy bills—especially gas prices—have risen significantly, likely exacerbating American renters’ struggles. Bank of America reported that, in August, the average utility bill price had risen 5.3 percent from a year earlier, growing faster than overall inflation.
Gas prices are now over 30 percent higher than before the war in Iran started on February 28, with the American Automobile Association (AAA) reporting the average cost of a gallon of regular gas at $4.47 nationwide on Tuesday.
This combination of higher prices across all fronts is what is hitting middle-income renting households so hard, and one of the reasons their increasing difficulties make researchers worry, Reynolds said.
"The rental market works together as one system, and when you have folks in the middle-income sector that are struggling, they might opt to find a cheaper apartment," she said.
"But that puts downward pressure on low-income households that are trying to afford their units in this market."
This affordability pressure, Reynolds explained, is "creeping into that middle income space" and is likely going to lead to more and more pressure on those low-income households that already have really high rates of non-payment.
What Is the Solution?
What to do about this rise in renters struggling to pay rent is "a tricky question," according to Reynolds, as measures like providing more rental assistance could prove inflationary, "and one of the things that the U.S. is really struggling with right now is inflation," she said.
"I think we need federal policy that reigns in inflation and at the same time we need more housing, but where we need that housing and at what price points is very localized. And unfortunately the cost to borrow money has also increased," she added.
"So the amount of subsidy that developers need to create affordable housing is only increasing. I know that a lot of states and localities are really thinking about how they can start to find ways to fund subsidizing development of housing and looking to things like revenue bonds—new, localized sources of funding to try to get more units down."
Contact Newsweek editors on this story: Matthew Robinson and Tony Phillips.
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