Housing Costs Surge in July, Accounting for 90 Percent of Total Inflation

Home for sale
by Owen Klinsky

 

The cost of housing surged in July, accounting for nearly 90 percent of total inflation, according to the latest Bureau of Labor Statistics Consumer Price Index (CPI) data released Wednesday.

DCNF-logoShelter costs rose 5.1 percent year-over-year and 0.4 percent month-over-month, after rising 0.2 percent in June, the BLS showed. The 0.4 percent monthly increase was greater than Bank of America economists’ expectations of 0.3 percent, according to investment research firm Morningstar.

“The most disappointing aspect of this report was the shelter data,” Omair Sharif, founder of the research firm Inflation Insights, wrote in a note after the report, according to Yahoo Finance.

The July increase in shelter costs was comprised of a 0.5 percent increase in rent, a 0.4 percent increase in owners’ equivalent rent and a 0.2 percent increase in lodging away from home, BLS data showed.

Rents are typically fixed for the duration of a lease, creating a lag between new lease prices and rental inflation data. As a result, despite cooling prices for new leases, overall housing inflation is expected to remain above pre-pandemic levels through the end of 2025, according to the Federal Reserve Bank of Minneapolis.

“Rents are up 22.3 percent since Jan ’21, but this metric suffers from large lags and will continue marching higher in the months ahead as it incorporates today’s price changes,” E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, wrote on X, formerly Twitter.

Rental and owners’ equivalent rent costs have both increased nearly 24 percent since the start of the COVID-19 pandemic in March 2020, according to the Federal Reserve Bank of St. Louis (FRED). Cumulative inflation, meanwhile, is somewhat lower at 22 percent.

Inflation measured 2.9 percent year-over-year in July, the first time the headline number has fallen below 3 percent in over two years.

– – –

Owen Klinsky is a reporter at Daily Caller News Foundation.
Photo “Home for Sale” by Pixabay.

 

 


Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@dailycallernewsfoundation.org.

Related posts

Comments