July saw another increase in rents, driving inflation higher.
Nationwide Rents Rise, Putting Pressure on Inflation
Nationwide rents rose in July, suggesting that the rental market is still putting upward pressure on overall inflation. According to a new report from Rent.com, rent prices increased by less than half a percentage point from the previous month. The national median rent price now stands at $2,038, just $15 shy of the record set in August 2022.
Surprising Message from Jobless Claims Numbers
On an annual basis, rent prices in July saw a modest increase of 0.3%. This rise in rent prices has surprised economists who had expected the United States to experience an economic slump or even a recession this summer following the Federal Reserve’s interest rate hikes.
The report predicts that if rents continue to rise at the current average rate, August will set a new record for U.S. rent prices.
While rents did increase last month, the pace was not as rapid as in previous years when the Fed lowered interest rates to near zero during the pandemic. Since the start of the pandemic, renting costs have surged by 25%, adding an average of $400 per month to the budgets of Americans already facing higher grocery and energy prices.
Higher rents have contributed to the surging inflation of the past two years, with rent accounting for approximately 7% of the consumer price index.
“Broad trends across the industry including an influx of new inventory and demand below seasonal norms have worked to slow rent growth to below-normal rates,” the report said. “Prices even dipped negative year over year in May. But rents continue to be elevated in the longer term.”
States in the South and Midwest experienced the highest year-over-year rental price growth, with the exception of New York, which saw a 13% increase in rents over the past year. South Dakota had the largest annual increase, with rents skyrocketing by 22.6%. Mississippi and Iowa also saw significant price increases of 22.4% and 14.3%, respectively.
However, just over a dozen states saw annual declines in rent prices. Washington State experienced the steepest drop with a 7.7% decrease, followed by Pennsylvania and Oregon with declines of over 5% in the past year.
The growth in rental prices coincides with mortgage rates reaching their highest levels in over 20 years. As of Thursday, the average rate on a 30-year fixed-rate mortgage was 7.09%, more than double the pre-interest rate hike average, according to Freddie Mac.
Despite the high rates, many economists and investors do not anticipate further rate hikes from the central bank this year, which is good news for home buyers as additional hikes could push mortgage rates even higher. According to CME Group’s FedWatch tool, 89% of investors believe the Fed will maintain steady rates at its next meeting in September.
Most investors and Fed watchers do not expect the central bank to begin cutting rates in the coming months. However, there is speculation that the Fed may start loosening its monetary policy in early 2024.
Click here to read more from The Washington Examiner.
" Conservative News Daily does not always share or support the views and opinions expressed here; they are just those of the writer."
*As an Amazon Associate I earn from qualifying purchases
Now loading...