12:38 p.m. ET, October 13, 2022
Leas increasing or down? Depend upon who you ask
Residential apartment are seen in New york city City in July.
(Spencer Platt/Getty Images)
Shelter expenses comprise a huge piece of the customer cost index. So with leas increasing drastically over the previous year (together with real estate rates), it’s not surprising that that CPI numbers continue to be available in greater than anticipated. But there is some confusion about whether rent increases are finally peaking or not.
The government said in the CPI report that both rent and owners’ equivalent rent (which measures how much a homeowner estimates they could get if they rented their property) rose 0.8% from August. The increase in owner’s equivalent rent was the biggest since June 1990.
“The rental market is coming back down to earth because high rents and economic uncertainty have put an end to the pandemic moving frenzy of 2020 and 2021, when remote work fueled an enormous surge in housing demand,” said Redfin deputy chief economist Taylor Marr.
“We expect rent growth to slow further into 2023 as Americans continue to hunker down and more new rentals hit the market,” Marr added.
If that’s true, inflation pressures could finally start to subside more dramatically. Investors may be hoping that’s the case, which is one reason to justify the big stock market surge Thursday.
“There is a disconnect. With Redfin coming out and saying there is a decline in leas, possibly the Fed has something to glob on to that will enable it to slow the rate walkings,” said Lamar Villere, portfolio supervisor with Villere & Co.
