This is a narration of our weekly Rent and Operating Trends Report.
The U.S. economy was thrown a slight curveball last week when the December Consumer Price Index came in higher than expected. Inflation increased at an annualized rate of 3.4% marking a modest uptick from previous months. Driving the growth was a 0.4% increase in the shelter index, which relates directly to the cost of housing. However, there is a significant lag in the shelter data for the CPI, and as we’ve reported, housing costs both for rent and for sale homes continue to decline. The energy index also contributed to a large portion of the monthly increase; however, oil prices have been coming down steadily and are near a six-month low. I do not see any significant inflation concerns over the long term, however if inflation remains at its current level, it will likely delay any interest rate cuts from the Fed.
Multifamily fundamentals had another flat week last week, which is a positive sign as we begin the year. Traffic registered a slight increase as apartment renters begin the search for their next home. With a healthy economy and a strong labor market, we are beginning to see housing demand return. Multifamily demand has grown, as persistently high mortgage rates have kept some would-be home buyers in the rental market.
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