Press release
Realtor.com® May Rental Report: Slower Decline in Rents Indicates Inflation May Persist
Median asking rent fell -0.7% in May, with declines across all unit sizes and pockets of increases in certain Midwest and Northeast markets SANTA CLARA,
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[{"type":"text","content":"Median asking rent fell -0.7% in May, with declines across all unit sizes and pockets of increases in certain Midwest and Northeast markets\nSANTA CLARA, Calif., June 11, 2024 /PRNewswire/ -- Rents dropped in May for the tenth consecutive month, though the pace of the decline has slowed since earlier this year, suggesting potential challenges for further reductions in overall inflation, according to the Realtor.com® Rental Report released today. This could potentially complicate the Fed's policy decisions and also underscores the need for more housing construction, particularly in some markets where a lack of rental supply is contributing to higher prices.\n\nThe median asking rent nationally for 0-2 bedroom units fell by -0.7% ($13) from May of last year to $1,732, and declined across all size categories. That's just $24 (-1.4%) below its August 2022 peak. Median asking rents have risen by 21.5% over the past five years.\n\"Slowing rent growth preceded slower shelter inflation, and falling market rents – as we've seen in the last 10 months of Realtor.com® data – have furthered that deceleration in shelter prices,\" said Danielle Hale, Chief Economist at Realtor.com®. \"As a significant driver of overall inflation, shelter costs need to slow further and are expected to do so. However, waning market rent declines foreshadow smaller Consumer Price Index shelter declines ahead and put a question mark on whether we've seen enough to rein in overall inflation, complicating the Fed's policymaking.\"\nCPI shelter index is \"stickier\"Shelter costs have been a big driver of overall consumer cost increases. The Consumer Price Index for shelter, which includes rent of primary residence and the owners' equivalent rent of residences, was up 5.5% year over year in April after rising 5.7% in March, and is down from a peak of 8.2% in March 2023. That government index typically lags behind market-based rent measures, like Realtor.com rent data, but recently that gap has widened, creating a \"stickier\" shelter index. It's expected to drop further, but the pace of that decline has slowed since February, making it potentially more difficult for the overall inflation picture to improve. For renters, an uptick in housing construction to alleviate short supplies could help lower costs.\nRents drop in South and West, increase in Midwest and Northeast...