REAL RENTS CONTINUE TO RISE
Shelter costs represent a large share of the average consumer’s expenditures. The shelter index rose 0.2% month-over-month in December after increasing 0.3% month-over-month in November. Over the past twelve months, the shelter index increased 2.5% before seasonal adjustments.
The increase in the shelter index partly reflects increases in rental prices. The BLS measure does not isolate the change in rental prices from the changes in the overall price index. NAHB constructs a real price index by deflating the price index for rent by the index for overall inflation. This measure indicates whether inflation in rents is faster or slower than general inflation and provides insight into the supply and demand conditions for rental housing, after controlling for overall inflation. When rents are rising faster (slower) than general inflation the real rent index rises (declines).
The real rent index has increased for eleven consecutive months. For the December data, the real rent index increased by 0.2% month-over-month and 1.1% over the past year.
Source : National Association Of Home Builders