Rent is Falling, But That May Not Help Lower Inflation

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Key Takeaways

  • Rent fell $13 successful May, nan 10th consecutive period that median asking rent moved little successful a Realtor.com survey. 
  • However, little rents haven’t shown up successful ostentation reports for illustration nan Consumer Price Index, which is group to beryllium released tomorrow.
  • Locations successful Texas and Tennessee showed nan largest declines successful rent, while immoderate midwestern cities reported expanding rents.

Rent fell for nan 10th consecutive period successful May, though lodging costs declined much slow this month, raising immoderate questions connected nan effect that shelter costs could person connected wide inflation. 

The median asking rent for units pinch zero to 2 bedrooms fell by 0.7% nationally, according to information from nan Realtor.com Rental Report. Rents are now astir $24 beneath their highest levels successful August 2022. Over nan past 5 years, median asking rents are up by much than 22%.

Rents person been a main driver of stubborn inflation and slowing declines could beryllium a bad motion for nan economy.

Lower Rents So Far Haven't Helped Curb Inflation

Shelter costs that see rent correspond a important information of nan Consumer Price Index (CPI), an ostentation study whose May edition is group to beryllium released this week. While industry data like Realtor.com's Rental Report person shown rents falling, inflation measures person not reflected that trend yet.

So far, CPI has shown rents continuing to rise, up 5.5% year-over-year successful April. While still elevated, rents are cooling from their highest yearly maturation of 8.2% successful March 2023. Since ostentation measures lag down manufacture data, this month's slowing declines are sparking worries complete whether rents are falling capable to dampen wide value pressures. 

“Waning marketplace rent declines foreshadow smaller Consumer Price Index shelter declines up and put a mobility people connected whether we’ve seen capable to rein successful wide inflation, complicating nan Fed’s policymaking,” said Danielle Hale, Realtor.com main economist. 

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