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CPI data from the BLS via the St. Louis Fed, chart by Mish

I repeat the core key theme for something like two years now. People keep telling me rents are falling, I keep doubting. The doubters have it correct again.

Rent of primary residence, the cost that best equates to the rent people pay, jumped 0.6 percent. Rent of primary residence has gone up at least 0.4 percent for 26 consecutive months!

All these “rents are falling” projections have been based on the price of new leases, but existing leases, vastly more important, keep rising.

With rents out of the way, Let’s tune into the BLS Report for the details. 

CPI Month-Over-Month

• The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in September on a seasonally adjusted basis, after increasing 0.6 percent in August
• The index for shelter was the largest contributor to the monthly all items increase, accounting for over half of the increase.
• An increase in the gasoline index was also a major contributor to the all items monthly rise. While the major energy component indexes were mixed in September, the energy index rose 1.5 percent over the month.
• The food index increased 0.2 percent in September, as it did in the previous two months. The index for food at home increased 0.1 percent over the month while the index for food away from home rose 0.4 percent.
• The index for all items less food and energy rose 0.3 percent in September, the same increase as in August.
• Indexes which increased in September include rent, owners’ equivalent rent, lodging away from home, motor vehicle insurance, recreation, personal care, and new vehicles.
• The indexes for used cars and trucks and for apparel were among those that decreased over the month.

CPI Month-Over-Month Shelter

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Shelter CPI data from the BLS via the St. Louis Fed, chart by Mish

Since September of 2021, rent and Owners’ Equivalent Rent (OER) have gone up at least 0.4 percent every month. Shelter is up 0.4 percent 24 out of 26 months.

OER is the price people would pay to rent one’s own home from themselves, unfurnished and without utilities. It’s an imputed number.

For the 34 percent of people who really do rent, these numbers are a killer.

CPI Year-Over Year

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CPI data from the BLS via the St. Louis Fed, chart by Mish

Year-Over-Year Numbers

• The all items index increased 3.7 percent for the 12 months ending September, the same increase as the 12 months ending in August.
• The all items less food and energy index rose 4.1 percent over the last 12 months.
• The energy index decreased 0.5 percent for the 12 months ending September.
• The food index increased 3.7 percent over the last year.

The downward trend in year-over-year CPI inflation is broken. It was 3.0 percent with much cheering in June. It’s now 3.7 percent for the past two months.

Year-over-year rent has increased at least 7.2 percent every month since September of 2022 and at least 4.2 percent every month since February of 2022.

To repeat, for the 34 percent of people who really do rent, these numbers are a killer.

On October 2, I asked When Will Record Housing Units Under Construction Ease Rent Inflation?

That’s really a trick question. For a better question, remove the lead “when” from the sentence.

I have been very skeptical, and rightly so, of falling rent prices for two years.

How the Fed Destroyed the Housing Market and Created Inflation in Pictures

For further discussion of the housing market, please see How the Fed Destroyed the Housing Market and Created Inflation in Pictures

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