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  • Writer's pictureRealFacts Editorial Team

Rents Are Still Rising and Pumping Up Inflation

For rent sign on a residential street.

Although rent growth has slowed in recent months, it still remains a key contributor to high inflation. “Housing inflation typically runs higher than general inflation,” commented Thomas LaSalvia, economist at Moody’s Analytics. “But it has to come down further than where it is right now.” Shelter inflation rose 5.7% YoY in March which is much higher than the average of about 3.3% from 2015 to 2019.

Property data company Yardi Matrix recorded renewal rents rise 4.6% YoY in January while asking rents on empty or available apartments were close to zero thanks to more apartments coming online recently. Single-family rentals are also on the rise with over half of 341 cities tracked seeing rents rise faster than wage growth according to property research firm Attom. “The fact that so few homes are available for sale in many markets clearly further helped increase rental demand for landlords and boost their bottom lines,” Attom Chief Executive Rob Barber said in a March report.

With that being said, shelter inflation often lags and isn’t totally accurate to real-time market trends. Many economists are predicting that by year-end shelter inflation will dip below 4% and inch closer to historic norms. With spring and summer comes peak leasing season and that will be very telling of where things are at. “I’d be very surprised if renewals don’t further cool,” said Jay Parsons, head of investment strategy at Madera Residential.

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