According to the National Association of Realtors, only 24% of home buyers in 2025 came from an apartment or house they rented, while 65% came from a previously owned home. The renter-to-buyer conversion rate has fallen sharply since 2023, underscoring how difficult it has become to bridge the affordability gap without existing housing equity. This trend reflects a market where unlocking equity is often the key to making a purchase work amid elevated mortgage rates and home prices.
Zonda’s proprietary Zonda Market Ranking (ZMR) reinforces this reality on the new-home side. For six consecutive months through March, the move-up/move-down segment ranked as ‘slightly overperforming’ nationally, modestly outperforming the broader market. It also outranked both the entry-level and high-end segments, which have consistently come in at ‘average.’ This pattern highlights where today’s demand is most durable. Buyers who can unlock equity, whether by selling a starter home or downsizing from a larger one, are better positioned to transact despite affordability headwinds.
Takeaways for the Home Building Industry
For home builders, this change matters. Repeat buyers are not just more prevalent, they are often more qualified, more decisive, and better positioned to absorb today’s higher monthly payments. In many markets, demand is less about generating new buyers and more about facilitating movement within the existing homeowner base. Homes that appeal to move-up and move-down households, particularly those that offer functional layouts, energy efficiency, and location driven value, are better aligned with today’s buyer pool. Further, a mortgage rate buydown in the 4% range can go a long way for an existing homeowner who has locked in a 3% interest rate on their current property.
From a broader perspective, the declining renter-to-buyer pipeline also reinforces the interconnectedness of the apartment and for-sale markets. Strong rental demand may persist not because renters prefer renting, but because fewer households can make the leap into ownership. For builders, understanding this friction point is essential when evaluating long-term demand, absorption expectations, and product mix decisions.
The insights in this article were taken from more in-depth research reports published in Zonda’s Apartment Outlook.
