November’s Consumer Price Index revealed a 0.6% month-over-month rise in the price of shelter along with a 7.1% year-over-year increase. This includes rent, which continued to embark on an upward trend.
According to the Bureau of Labor Statistics, housing costs are once again the largest driver of CPI growth. The current national average asking rent price now stands at $2,008; an 8.4% increase from the same period last year.
Still, although rent continues to increase, the rate at which it is rising appears to be slowing, chief economist at Pantheon Macroeconomics Ian Shepherdson noted. “It is becoming ever more clear from private sector rent data that the next big move in the CPI measure will be a substantial slowing,” Sheperdson remarked in a note following the release of Tuesday’s CPI data.
Property management software company RealPage reported a sudden slowdown in rent growth, which now stands at 6.5% on a year-over-year basis for new leases. This is a significant decline from the peak of 15.7% in March 2022.
Federal Reserve chair Jerome Powell remarked that because the rate for new leases is coming down, investors can expect an inflation cooldown next year.