Some people don't want to be locked down to one place for long. When I was in my twenties I moved to a different town every year when my lease was up just to see if I would like it better somewhere else. Or I'd get a raise and be able to afford a better place the next year. For people that want relatively short term housing, renting is a far superior option.

If I took out a mortgage on a place and then sold it a year later, I'd have almost no equity since you pay almost all interest in the front part of the loan.