Red-hot rental market is cooling in a good sign for inflation

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Renters are on track to get some relief in 2023 as a growing number of indicators suggest the red-hot rental market has started to cool, a shift that could also help bring down decades-high inflation that has been pushing interest rates higher.

The cooling rental market has yet to show up in the federal inflation data because those numbers reflect what renters are paying on their existing leases rather than what landlords are currently charging new tenants, leading to about a 12-month lag in the federal data,

“We saw the year-over-year growth in our rent index peak last February, and it’s been decelerating ever since then,” Tucker said. “We’ve had month-over-month declines in our rent index in the last few months, so that’s a promising look ahead that the CPI measures of rent are likely to turn the corner sometime this spring and start to decelerate.”

Helping drive rents lower is an overall slowdown in how frequently people are moving compared to the pandemic-driven churn seen over the past two years.decline in 2022 from the record numbers it saw in 2021 and 2020, according to a company spokesperson. That trend is set to continue into 2023 as more people are expected to stay put amid economic uncertainty and fears of a recession.

Rents have also varied widely based on geography, with some of the hottest markets seeing the most drastic slowdowns while more affordable markets were some of the few places to see rent increase. In December, rents fell 0.9% in Las Vegas and 0.8% in Dallas while Cleveland, Pittsburgh, and Charlotte, North Carolina, were among a handful of cities to see rents increase last month,Also driving down rents is a wave of new apartment buildings that have been opening over the past year.

 

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