Census department data, chart by Mish

Chart Highlights 

• Housing units under construction peaked in October of 2022 at 1.7 million units
• Single-family units peaked at 990,000 in February of 2006. The most recent high was 831,000 in May of 2022. 
• Single-family units under construction are now falling rapidly, down to 698,000.
• The record for multi-family units under construction was 991,000 all the way back in July of 1973.
• The number of multi-family units under construction is now at 977,000 and rising. Another surge would set a new record.

Price of Rent

National rent price data from ApartmentList, OER and CPI data from the BLS, chart by Mish

Most analysts have expected the price of rent to decline based on national rent prices.

I need to update that chart because it's a bit stale. But the key point is rent prices are not falling.

CPI Shelter Remains Hot, Just Not as Hot

CPI data from the BLS chart by Mish

Shelter Notes

• Shelter comprises 34.59 percent of the CPI
• Rent of primary residence is standard rent (not owner occupied), unfurnished without utilities.
• Owners' Equivalent Rent (OER), is the estimated price one would pay to rent one's own house, unfurnished and without utilities. It is the single largest CPI component at 25.44 percent.
• The shelter index increased 8.1 percent over the last year, accounting for over 60 percent of the total increase in all items less food and energy.

Price of Shelter

In March, I noted that shelter rose at least 0.5 percent for 14 consecutive months dating to January 2022. 

In April, shelter broke the string with a 0.4 percent rise, still a very hefty number for a Fed struggling to tame the CPI.

False Dawns on Falling Rent

All these "rent is declining" false dawns have been wrong for three reasons.

1. They are based on new leases, not existing leases.
2. They report increases all at once whereas the BLS smooths things out over a 12-month period due to the fact that not all leases renew in the same month.
3. Seasonality

In the months ahead we may finally see rents ease due to the fact there is a near-record number of apartments under construction. Just don't expect to see huge declines. 

But given the weight of shelter in the CPI, stabilization would greatly assist the Fed.

For more on the latest CPI numbers please see Consumers Prices Jump Another 0.4 Percent in April, Led by Shelter

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