Rents Showing Signs of Normalcy
Consumer Price Index (CPI) data for August show that, in real terms, residential rents gained back some of the ground they had lost since April. During the month, the CPI component measuring rent in primary residences increased at a (seasonally adjusted annual) rate of 3.8%—just about an average increase for the CPI's rent component over the past year. However, the overall CPI measuring general inflation actually declined at a rate of 1.6%. The decline occurred largely as a result of energy prices, which fell in August on the heels of three straight months of sharp increases. 

For owners of rental properties, the bottom line is that, NAHB's real rent index (which adjusts changes in residential rents for overall inflation) increased by a half point, from 107.1 to 107.6.  Although this increase takes the real rent index almost back up to its July level, the index is still well below the 108.9 it registered in April, or the 109.3 it registered a year ago, in August of 2007.

 Based on seasonally adjusted Consumer Price Indices; U.S. Department of Labor, Bureau of Labor Statistics. The annual rates indicate what the percentage change would be if the current monthly rate were sustained over a 12-month period. The real rent index is the CPI for rent of primary residence divided by the CPI for all items and scaled so that January 1995 is 100. [ return to top ]