The housing market in the U.S. received welcome data Tuesday, but the bad news is rents are still on the rise, they’re just rising at a much slower pace.
What Happened: According to Redfin Corp. RDFN, the median asking rent in the U.S. increased 7.4% year over year to $2,007 in November, the smallest gain in 15 months and the sixth consecutive month that rent growth slowed.
In contrast, summer rent increases were twice as high.
In addition, after over a year of double-digit monthly rent increases, November represented the third consecutive month of a drop to single-digit rent growth.
Expectations are that rents will continue to cool, which would help bring down overall inflation in January, as the shelter index was the dominant factor in the increase of the index for all items less food and energy in November, according to the Bureau of Labor and Statistics (BLS).
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Meanwhile, according to Redfin’s data, rents cooled off in 14 major U.S. metro areas.
- Milwaukee, WI (-13.1%)
- Houston, TX (-6.3%)
- Austin, TX (-5.3%)
- Baltimore, MD (-4.4%)
- Minneapolis, MN (-4.1%)
- Chicago, IL (-3.8%)
- Denver, CO (-2.9%)
- Atlanta, GA (-1.8%)
- Dallas, TX (-1.8%)
- Jacksonville, FL (-1.8%)
- Boston, MA (-1.7%)
- Los Angeles, CA (-1.3%)
- Las Vegas, NV (-0.7%)
- New Orleans, LA (-0.3%)
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The CPI Data: Consumer Price Index (CPI) figures issued by the BLS Tuesday showed that top-line inflation increased 7.1% year-over-year, down from 7.7% in October, raising hopes that the Federal Reserve will begin to issue less aggressive rate hikes, which could ease pressure on the housing market.
Markets reacted kindly to the CPI data, which caused housing stocks like Toll Brothers Inc TOL, Opendoor Technologies Inc OPEN, Invitation Homes Inc INVH, and KB Home KBH to soar.
The shelter index continued to increase, rising 0.6% over the month. The rent index rose 0.8% over the month, and the owners' equivalent rent index rose 0.7%.
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