The month-over-month pace of rent growth was 0.5% in March; a drop from the second half of 2022 when the monthly numbers were hovering at 0.8%.
That could signal further drops to come. "The rollover in rents is finally underway," wrote Kieran Clancy, senior U.S. economist at Pantheon Macroeconomics, in a note.The monthly data is a bright spot for rent prices because the annual number is still coming in hot — with rents up nearlyshelter component of CPI comprises 40% of the index overall, and is a big reason inflation remains stubbornly high.
"The index for shelter was by far the largest contributor to the monthly all items increase," the Labor Department emphasized in its news release. The way the department measures rent in the CPI is different from other data sources, which only look at new asking rents, i.e., what a landlord charges on a new lease.Zeroing in on the asking rent data serves as a good leading indicator of where the CPI rent measure is headed. And those numbers have been moderating since last year.
Property values on multifamily apartments are falling at the same time that interest rates are soaring and landlords' ability to push rents up even higher is weakening. That's an issue for anyone who bought buildings in 2021, when rates were rock-bottom, using a floating rate mortgage, as theRents are still pretty high, but the astronomical increases we've seen are likely going away.
Rent growth may have lessened but the price for has not.