Dive Brief:

• In a housing market Catch-22, rents in cities like New York, Seattle and San Jose, CA, are so high that the only way tenants can cut their housing costs is to buy starter homes. But once renters pay their housing expenses, there’s not enough money left to save for down payments.

• Research by the National Association of Realtors revealed that big-city rents are rising at “unsustainable” levels that have surpassed the growth of household income. The report showed that over five years, rents rose an average of 15%, while the income of renters grew by 11%.

• A salve for renters with money put aside has been to ditch their leases and buy new homes with fixed, 30-year mortgages, which keep their monthly payments consistent over the years.

Dive Insight:

Builders in these markets have the opportunity to increase their inventory of affordable, entry-level houses that would allow renters to convert to homeowners. However, most builders have instead have been focusing on larger homes for wealthier buyers who can afford to move now.

"With a stronger economy and labor market, it's critical to increase housing starts for entry-level buyers” before rents get any higher and further delay the entry of millennials into the for-sale housing market, NAR Chief Economist Lawrence Yun said.