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in the East South Central census division, including Alabama, Kentucky Mississippi, and Tennessee, have the highest median outlays of $155 per month. Renters making $75,000 or more have the highest utility bills, amounting to $150 per month. Highest -income renters in the East South Central area spend the most, or $188 per month. Although lower-income households spend less than higher -income households on utilities, they must dedicate a larger share of their incomes to these costs. Renters in the lowest income group spend 17 percent of their annual incomes on utilities, and highest -income households spend only 2 percent. While the median share of income devoted to utility costs has fallen across all income groups over the last five years, these costs still contribute significantly to overall housing outlays. Some renter households make tradeoffs between housing they can afford and location, thus adding to their transportation costs. Indeed, the median household with no housing cost burden spends more on transportation than the median household that is cost burdened. The 2016 Consumer Expenditure Survey reports that transportation costs account for 31 percent of total housing and transportation spending for the median renter. Even excluding vehicle purchases, the median transportation cost represents 21 percent of housing and transportation costs combined. CONSEQUENCES OF HIGH HOUSING COSTS High housing costs have eroded renter incomes and exacerbated inequality among renter households. After paying for their housing, the amount of money that lowest -income renters had left over for all other expenses fell 18 percent from 2001 to 2016 (Figure 31). Over the same period, the amount of money that highest -income renters had to spend on other costs increased by 7 percent. In 2016, the median renter household in the bottom income quartile paid 60 percent of its income for housing. For the median renter in this income group, the amount left over for all other needs was less than $500 per month (Figure 32). By comparison, the median renter in the top quartile paid just 14 percent of household income for hous- ing and had nearly $9,700 left over for other expenses. A recent JCHS working paper assesses the gap between house- hold incomes and outlays for both housing and basic living expenses (including transportation, food, childcare, healthcare, and income taxes) in three metropolitan areas in 2015. Not sur- prisingly, low-income households faced significant challenges in paying for basic necessities after covering their rents, even if these households were fortunate enough to find housing they could afford. Despite lower living expenses, lowest -income single - person households still faced significant financial challenges in covering housing costs and necessities. The results also show that childcare costs incurred by families leave even moderate -income households with cost burdens. 1'HE OUTLOOK While the recent drop in the number of housing cost -burdened renters is good news, future meaningful progress is far from cer- tain. Indeed, at the average annual pace of decline from 2014 to 2016, it would take another 15 years just to return to the 2006 level of 17.0 million cost -burdened households and 24 years to hit the 2001 level of 14.8 million households. In effect, the latest economic cycle seems to have defined a new normal for the nation's rental affordability challenges. Improvement in rental affordability depends on the trajectories of household incomes and housing costs. The recent growth in renter incomes has come at a time when the economy is nearing full employment, so sustained gains are uncertain. In addition, the Bureau of Labor Statistics expects that the fastest employment growth will be in several low-wage occupations—such as personal care, healthcare support, and food preparationwithlarge shares of housing cost -burdened workers. For earners in these occupa- tions, full employment will not guarantee access to housing they can afford. Meanwhile, tight rental market conditions have propelled rapid growth in housing costs relative to incomes, although the recent rise in vacancy rates may help to ease some of the pressure on rents in the short term. Turning back the tide on the nation's rental afford- ability challenges thus requires efforts to address lagging incomes among those near the bottom of the economic ladder as well as steps to help reduce the cost of housing. And for those with low incomes, increasing access to rental assistance, expanding the low- cost stock, and preserving affordable housing will be necessary to close the gap between income and housing costs. 31