Seasonality May Not Be the Driving Force of Recent Rent Drops

Apartment List’s National Rent Index fell by 0.8 percent in December, the fourth straight month-over-month decline, according to Bill McBride in the CalculatedRisk Newsletter. While a December decline is consistent with the typical seasonal trend, a 0.8 percent decrease is far sharper than seasonal drops recorded in years past.

Throughout 2022, the national median rent increased by a total of 3.8 percent, well below the 17.6 percent spike in rents seen throughout 2021. Rents are still increasing year-over-year, but are expected to slow as household formation decelerates and new supply becomes available.

Rents are still increasing YoY, and we should expect this to continue to spill over into measures of inflation. The Owners’ Equivalent Rent (OER) was up 7.1% YoY in November, from 6.9% YoY in October - and will likely increase further in the coming months even as rents slow sharply.

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