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October 14th, 2023 
Awake Goy 
The story of inflation in the U.S. continues to be a story about the rent being too damn high.
Even as the pace of inflation slowed and rent growth is slowly trending down, it’s still rising faster than almost every other cost for Americans, largely driving overall inflation numbers. Rent increased 7.4 percent year over year as of September, according to statistics from the Bureau of Labor.
The consumer price index, which is the federal government’s official tally of inflation, rose .4 percent from August to September, resulting in a 3.7 percent rise over the last twelve months. The largest share of that increase was from rising housing costs, which account for more than half of the increase. The cost of “shelter,” which includes rent, hotels and vacation rentals and “owners’ equivalent rent”—property owners’ estimate of what their homes would rent for—rose 7.2 percent year over year. This means rent rose faster than “shelter” overall, outpacing costs for homeowners.
In a statement on Twitter, People's Action Homes Guarantee campaign director Tara Raghuveer wrote, “Rent is the most enduring contributor to inflation. It's not just about the measures, it's about the impact on tenants. Rent is the biggest monthly expense for most people. Rent hikes, even ones that look small on charts, can determine whether or not a family gets groceries.” The Homes Guarantee campaign is calling on the federal government to regulate rents in properties with federally-backed mortgages.
Jay Parsons, chief economist at RealPage, which itself is under federal investigation for the role its price-fixing software played in inflating rents, said on Twitter that the numbers showed rent growth cooling. (Rent growth is slower than it was last Spring.) He said there was a lag between asking rents and CPI.
“We know with confidence where this train is going: Down, down, down based on what's happening with real-time "street rents" or asking rents. Real-time rents are cooling MUCH faster than CPI is showing or COULD show based on how it's built,” he wrote.
Of course, rent growth slowing down doesn’t mean that it will get any cheaper; just that it will get more expensive at a slower pace. The conventional wisdom around inflation has often held that once various societal pressures such as supply chain disruptions ease, prices that have risen as a result go back down. But often prices that rise stay high even as wages lag. While an increase to housing supply may moderate rents writ large, it doesn’t mean they’ll return to pre-pandemic norms, and it also doesn’t mean that moderation will be evenly distributed across income bands.
Mark Zandi, chief economist at Moody’s, said on Twitter that the CPI increase was “on script” but called the increase in shelter costs a surprise. He said shelter costs would eventually “moderate.”
The second largest driver in inflation was fuel costs, with gas rising 3 percent year over year. Costs for car repair and insurance also increased by large amounts year over year, with “transportation services” rising 9.1 percent year over year.
The rise in costs come as a number of pandemic-era protections elapse that will directly impact the finances of renters. Student loan payments will begin again this month after a three year pause, with average monthly payments of about $500 by some estimates. A three-year ban on Medicaid disenrollment also ended this year, with 7 million Americans kicked off their plans since April. Medicaid enrollment had grown from 71 to 94 million people as of April, making it by far the most widely-used form of insurance in the United States. Former enrollees will now have less money for rent after paying medical bills or premiums for Affordable Care Act plans.
And pandemic relief funding for childcare centers also elapsed on September 30. The $24 billion in funding announced as part of the American Rescue Plan in 2021 covered more than 3 million children, according to the Century Foundation. The average annual cost for childcare is more than $10,000 per child.
Asking rents are, of course, not a straightforward measure of affordability, as they don’t factor in local wages. And Parson acknowledged on Twitter that rents are unlikely to return to the pre-pandemic levels. Every analysis of CPI also comes with the caveat that rents can rise for poorer people as they cool for more affluent people, pointing to a need for more federal funding for deeply-affordable housing, which remains consistently underbuilt.
Renters should take CPI numbers with a grain of salt, ultimately, but the story is a familiar one: rents are still rising faster than most people can withstand, and the end of some key federal programs are going to increase the pain for the poorest renters.
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