The rate of rent increase continues to slow

by Calculated risk on 09/28/2022 11:15:00 AM

Today, in the Risk Calculated Real Estate newsletter: The pace of rent increases continues to slow

Brief excerpt:

Below is a graph of the annual (on an annual basis) change for these measures since January 2015. All these measures up to August 2022 (list of apartments up to September 2022).

Note that new rent measures (Zillow, apartment listing) fell early in the pandemic, while BLS measures were flat. Then new leases took off, and BLS actions started to rise.

The Zillow gauge rose 12.3% year-over-year in August, down from 13.8% year-over-year in July. This is down from a peak of 17.2% year over year in February.

The ApartmentList metric is up 7.5% year over year as of September, down from 9.8% in August. This is down from a peak of 18.0% year over year last November.

Rents are still increasing, and we should expect this to continue to spill over into inflation measures. Landlords’ equivalent rent rose 6.3% YoY in August, from 5.8% YoY in July — and is likely to rise further in the coming months.

I doubt rent increases will slow further over the coming months as the pace of household formation slows and more supply comes into the market.

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