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Real Rents Slip in January as Energy Costs Rise
The encouraging increase in real rents that occurred at the end of last year slipped in January, according to NAHB’s real rent index.
The index, which adjusts residential rents in the Consumer Price Index (CPI) for inflation, slid from 107.5 in December to 106.9 in January, indicating that overall inflation outpaced the growth in rents.
The energy component of the CPI, which alone accounted for 70% of inflation last month, was largely to blame for the decline in real rents, according to NAHB economist Paul Emrath.
Nominal rents advanced at an annual rate of 1.6% in January, down from a 2.8% clip in both November and December. Not weighed against the overall inflation rate, rents picked up steam last October, when they were climbing at an annual rate of 4.5%.
Real rents started out 2005 at 108.0 on NAHB’s index and have yet to return to that level.
On top of lofty housing prices, rising mortgage interest rates are expected to gradually slow home buying demand this year, according to housing economists at NAHB, and that should carry some new demand over into rentals.
For more information, e-mail Paul Emrath at NAHB, or call him at 800-368-5242 x8449.
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