\n\n“Housing keeps getting more expensive \u2014 and even though new data shows that overall price increases are slowing down, surging rent prices underscore how difficult it could be to bring inflation under control.<\/p>\n\n\n\n
Prices were 8.3 percent higher in August<\/a> compared to a year before, according to the Consumer Price Index report released on Tuesday. That\u2019s slower than it was the month before, when inflation climbed 8.5 percent<\/a>, but it\u2019s still uncomfortably high for consumers and policymakers. Prices picked up 0.1 percent from July to August.<\/p>\n\n\n\n One of the biggest drivers of inflation has been higher rent prices<\/a>. According to data from Zillow<\/a>, the typical US monthly rent was $2,090 in August, up 12.3 percent from a year before. That is much higher than it was before the pandemic \u2014 in February 2020, the nation\u2019s average rent was $1,660.<\/p>\n\n\n\n According to the CPI report, shelter prices \u2014 which include rent, lodging away from home<\/a>, and household insurance \u2014 rose 0.7 percent in August from the month before, the biggest monthly jump since 1991<\/a>. The rent index by itself also increased 0.7 percent from July, and was up 6.7 percent<\/a> from a year ago.” …<\/p>\n\n\n\n “Sarah House, a senior economist at Wells Fargo, said that rent prices could be decelerating as supply improves and landlords start to \u201cget a little bit more realistic\u201d about how much they can charge before they see more pushback from renters. But she said that rent prices in the CPI measure tend to move slowly, so it could take time for the government data to reflect the price deceleration that private-sector data may already be picking up.<\/p>\n\n\n\n That\u2019s largely because the government data also takes into account existing rentals, while many private data sources only examine prices for new leases to capture current market conditions. Since rents typically change when leases expire, which tends to happen annually, this can lead to a lag<\/a> in government data.<\/p>\n\n\n\n \u201cI think we\u2019re close to beginning to see a slowdown in the monthly rate of the price gain,\u201d House said. \u201cBut it\u2019s still likely to remain pretty strong in a historical sense for some time.\u201d<\/p>\n\n\n\n Omair Sharif, the founder and president of research firm Inflation Insights, also said rent price gains could slow in the coming months as the CPI measure eventually catches up to private-sector data.<\/p>\n\n\n\n \u201cAround the end of this year into the first quarter of next year, we should probably start to see the CPI data start to mimic more closely what we\u2019re seeing in terms of that deceleration,\u201d Sharif said.<\/p>\n\n\n\n A deceleration in rental price growth could help bring down overall inflation closer to the Fed\u2019s goal of 2 percent annual inflation<\/a>. Although prices for rent, food, and medical care climbed in August, prices for gasoline, used cars, and airline fares dropped<\/a>.<\/p>\n\n\n\n Still, mortgage rates have skyrocketed to their highest levels since 2008<\/a> and home prices remain much higher<\/a> than they were before the pandemic. That has made it harder for people to afford monthly payments, leading to some potential homebuyers being priced out of the market. If people continue renting rather than buying, that could drive up demand for rentals and keep prices high.”<\/p>\n\n\n\n
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