Housing inflation is higher than the Fed thinks — but already falling
So much depends upon the choice of a price index
According to the latest national rent data from Apartment List, “year-over-year rent growth currently stands at a staggering 15.3 percent, but is down slightly from a peak of 17.8 percent at the start of the year.” This is part of a 2022 trend in which rent hikes — while still large — are smaller than they were in 2021.
And on its face, this seems like good news for Jay Powell. High levels of rent increases confirm that raising interest rates is the correct course, while the fact that inflation is already moderating compared to last year suggests that its odds of success are good.
Unfortunately for Powell, the Bureau of Labor Statistics, which calculates the official Consumer Price Index, has a totally different story.
The BLS says that the most recent year-over-year rent increase was 5.2 percent, which is not only lower than the Apartment List number but a significant acceleration from only 1.8 percent a year ago.
So what’s the deal? How can rent growth be accelerating in the BLS data…