For 26 consecutive months through August 2021, rents increased by at least 0.4%.
I’ve been repeating a core theme for the past couple of years. People keep saying rents are going down, but I keep having doubts. Skeptics again claim it is correct.
Rent for a primary residence, the cost closest to what people pay in rent, rose 0.6%. Rent for primary residences increased by at least 0.4% for 26 consecutive months.
All these “rents are falling” projections are based on new lease prices, but by far the most important existing leases continue to rise.
Don’t worry about the rent, just listen to the following: BLS report For more information.
CPI m/m
- The Consumer Price Index for Urban Consumers (CPI-U) rose by a seasonally adjusted 0.4% in September, after rising 0.6% in August.
- The shelter index contributed the most to the monthly increase in all items, accounting for more than half of the increase.
- The increase in the gasoline index also contributed significantly to the month-on-month increase in all items. The main energy mix index was mixed in September, but the energy index rose 1.5% for the month.
- The food index rose 0.2% in September, the same as the previous two months. The index for food at home increased by 0.1% in the same month, and the index for food outside the home increased by 0.4%.
- The index for all items except food and energy rose 0.3% in September, the same rate of increase as in August.
- Indexes that rose in September include rent, owner’s equivalent rent, non-home accommodation, auto insurance, recreation, personal care and new cars.
- Indexes for used cars, trucks, and apparel were among the indexes that fell during the month.
CPI m/m shelter
Since September 2021, rents and Owner Equivalent Rent (OER) have increased by at least 0.4% every month. Shelters rose 0.4% in 24 of 26 months.
OER is the price people pay to rent their home unfurnished and without utilities. This is an estimated value.
For the 34% of people who actually rent, this number is devastating.
CPI year-on-year change
Year-over-year figures
- The all-item index rose 3.7% in the 12 months to September, the same rate of increase as in the 12 months to August.
- The index for all items excluding food and energy rose 4.1% over the past 12 months.
- The energy index fell by 0.5% in the 12 months to September.
- The food index increased by 3.7% compared to last year.
The year-on-year downward trend in the CPI inflation rate has been broken. In June, there was much cheer and the figure was 3.0%. In the past two months, it has been 3.7%.
Year-over-year rents have increased by at least 7.2% every month since September 2022 and by at least 4.2% every month since February 2022.
Again, for the 34% of people who actually rent, this number is devastating.
I asked about it on October 2nd. When will record numbers of housing units under construction ease rent inflation?
That’s really a trick question. To ask a better question, remove the leading “when” from the sentence.
I’ve been very skeptical about the decline in rental prices over the last two years, and rightly so.
See pictures of how the Fed destroyed the housing market and caused inflation
Learn more about the housing market below. See pictures of how the Fed destroyed the housing market and caused inflation
