WASHINGTON–The tight market in rental housing that has driven up rents for many people or forced them into smaller spaces could begin to ease over the next year.
According to the new data, a 42-year high in the number of apartment buildings under construction points to an impending surge in supply that portends a moderation in the cost of shelter, which in June capped the biggest 12-month jump in almost a decade, Bloomberg reported.
Costs for shelter accounted for 63.9% of the run-up in the consumer price index excluding food and fuel in the 12 months ended June, the most since 2007 and almost four times the contribution of medical care, the next-biggest source of upward pressure, according to the Labor Department, Bloomberg said.
Bloomberg added that so-called shelter inflation is “reaching a plateau” according to a forecast from Goldman Sachs, while Morgan Stanley went one step further and has forecast a deceleration over the next couple of years.
Rents and owners’ equivalent rent, or OER, together make up more than 40% of the core consumer price index and about 17% of the Fed’s preferred price measure that is tied to consumer spending, excluding the volatile food and fuel components.