TAMPA, Fla. (WFLA) — For Americans worried about the cost of living, amid new reports on national inflation levels, real estate company Redfin reports that even though prices are still going up, the upswing is starting to slow. Mortgage rates also declined, compared to the previous week.
According to a new Redfin report, focused on rental prices across the United States, rent growth slowed down in December, marking the seventh straight month in a row that it had. Still, prices are up 5% compared to December 2021.
Housing, or shelter, is one of the big drivers of inflation in the U.S. In the latest Consumer Price Index, released Thursday, housing and shelter costs were one of several categories to see price increases, despite others declining. On its own, the shelter index increased 7.5%, which the Bureau of Labor Statistics reported was more than half of all item price increases, minus food and energy.
“The shelter index continued to increase, rising 0.8% over the month. The rent index rose 0.8% over the month, and the owners’ equivalent rent index also rose 0.8%,” the BLS reported. “The shelter index was the dominant factor in the monthly increase in the index for all items less food and energy.”
Between rent and owners’ equivalents, or mortgages, rent increased by a larger percentage from December 2021 to December 2022. While owners’ equivalent was up 7.5%, like the overall shelter index, rent was up higher, with an 8.3% increase over the past year.
The Redfin report focused on rent, rather than both rent and mortgages like the CPI. In the past month, December 2022, Redfin said median rent costs had declined 1.4%, nationally. According to a Redfin economist, there’s still more room for rental costs to drop.
“Rents have room to fall. While they’ve cooled significantly from their peak, it still costs the typical renter 20% more to take on a new lease than it did two years ago,” Redfin Economics Research Lead Chen Zhao said. “An increase in the number of rentals on the market should also cause rents to ease in the coming months. Rental supply is growing due to an influx of construction in recent years, ebbing household formation and a slow homebuying market, which is driving many homeowners to rent out their properties rather than sell.”
The real estate company also reported that December marked a continued fall from a peak in August, where median rents hit over $2,000. The current median, as of Redfin’s December data, was $1,979 nationally, a 4.8% increase over the year before.
Meanwhile, interest for 30 year fixed mortgage rates fell 0.15% compared to the previous week, hitting 6.33%, according to reporting by Freddie Mac, a federally backed mortgage company.
“While mortgage rates have resumed their decline, the market remains hypersensitive to rate movements, with purchase demand experiencing large swings relative to small changes in rates,” Sam Khater, Freddie Mac’s Chief Economist, said. “Over the last few weeks latent demand has been on display with buyers jumping in and out of the market as rates move.”