As interest rates increase more people will be pushed toward rentals. Which will continue to push up rates.
Why it matters: Housing costs, including skyrocketing rent prices, are a major driver of inflation, as Matt explained last week.
What’s happening: The U.S. median rental price fell last month for the first time since November 2021, to $1,771 from $1,781 in July, Realtor.com reported this morning.
Meanwhile, a couple of other data sets seem to confirm that at least for a month — rent increases weren’t so painful:
Median rents for single-family homes — which typically command higher prices than apartments — also fell slightly over the past three weeks, according to data from Altos Research.
Rent prices in Manhattan, one of the hottest markets in the country, plateaued in August, according to a report also out today from brokerage Douglas Elliman.
This was somewhat unexpected given that August typically sees the highest level of activity in the New York market, said Jonathan Miller, the CEO of appraisal firm Miller Samuel, who authored the Elliman report.
Zoom out: Rents are still near record highs, and these movements aren’t yet a trend — just a one-month data point.
Plus, as rising mortgage rates discourage home-buying it pushes more people into the rental market — driving more inflation. Quite the conundrum.
What we’re watching: The rental market may only truly cool off if the economy enters a recession, Miller says.
Axios Markets By Emily Peck and Matt Phillips · Sep 22, 2022