Rents Falling in Real Time, But Official Data Lags Behind

Rent costs have been driving high inflation for months, but real-time data shows rents falling or cooling significantly since last year. This disconnect between official inflation reports and on-the-ground data has puzzled economists.

Fresh data shows rents down 1% nationwide over the past year, with drops in major cities like Austin, Atlanta, and Nashville. But CPI data shows shelter costs still up 6%.

Economists say CPI rental data lags real-time figures since it tracks a wider group of tenants, not just those signing new leases. Also, units are only captured every 6 months.

Even if rent growth stopped completely, it would take 2 more years of flat rents to bring shelter inflation down to 2% due to strong undersupply forces.

In Florida and other markets seeing supply rising and demand cooling, rent drops are already happening. But the lags in official data haven't caught up to match market conditions.