(Bloomberg)—A record share of Americans predict rents will increase over the next 12 months, according to 2010 data from Fannie Mae.
In the February survey released on Monday, 69% of respondents say rental prices will increase. On average, consumers expect rents to increase by 7.1% in the coming year, down slightly from January, which has set a record pace.
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Rent is a backward indicator in the consumer-price index, as tenants see a change when their lease is renewed or when they move to a new location. This means that many long-term tenants have yet to experience the worst of price hikes.
The average one-bedroom rent posted an all-time high in February — a record it’s set for the ninth time in the past 10 months, according to Jumper’s National Index, which tracks the top 100 rental markets in the US.
The Federal Reserve Bank of San Francisco said in an economic, “Continuous increase in rental demand will increase the average rent of the entire stock of units in the market,” which in turn feeds into the rent component of the consumer-price index. Brief last month.
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The Fannie Mae Monthly Survey provides a window into consumers’ perceptions of the housing market. Assumptions are especially important in times of high inflation because they can become self-sustaining.
The pandemic-era boom in the housing market has cost many homebuyers, forcing them to rent, leading to higher rental prices.
And with the Federal Reserve raising interest rates to cool consumer prices, more consumers expect higher mortgage rates and home prices in the coming year, Fannie Mae said.
Since mid-2020, the Federal Reserve’s index on long-term inflation expectations has risen sharply, but is only slightly above average over the past decade.
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