Red-hot rental market is cooling in a good sign for inflation
Surging rental costs have been one of the biggest drivers of inflation over the past two years
Economists and industry analysts are expecting a significant slowdown this year driven by a wave of new apartment construction and more renters staying put amid economic uncertainty
The cooling rental market has yet to show up in the federal inflation data because those numbers reflect what renters are paying on their existing leases rather than what landlords are currently charging new tenants, leading to about a 12-month lag in the federal data, researchers have found
As renters enter new leases with smaller increases or find a better deal at another property, the slowdown will start to show up in the federal data as soon as this spring
Even before falling rents are factored in, inflation has been showing signs of improving, helped largely by a drop in gas prices. The consumer price index fell 0.1% in December compared to the prior month, the largest monthly decline since the start of the pandemic