The cost of renting an apartment or home is rising rapidly, keeping inflation high and making it difficult for tight-budget households to live.
Rental prices for primary homes rose 5.2% in the year to May. 0.6% increase Compared to the previous month, it is comparable to the fast pace of April. The measure of estimating the consumer value of owning a home using rent is also rising rapidly, and in fact it is accelerating slightly on a monthly basis.
Housing costs dominate the overall inflation index, so even if the Federal Reserve raises interest rates to cool inflation, housing costs continue to put pressure on overall prices. In fact, higher mortgage rates can prevent lessors from moving to home ownership and the rental market may continue to expand.
Further rent inflation is almost inevitable. Market rents have risen sharply throughout 2021, and these trends are slowly penetrating official inflation data as they measure existing rents as well as new rents.
“I feel the rental market is very tight. Very few vacancies and therefore rents have risen significantly,” said Igor Popov, chief economist on the listing site’s apartment list, prior to the inflation report. Said. “Rent growth and occupancy have deviated from Everest’s peak and are returning to base camp, but we are still far from the ocean.”