A recent CoreLogic survey indicated that 70% of consumers are citing high home inflation and surging home prices as a reason to rent. However, increased demand for rental properties is causing a problem of its own. The rental markets are growing more and more crowded and increasing demand for rentals risks creating a new affordability problem. More than one-third of consumers said rentals in their neighborhood were either not very or not-at-all affordable, according to the survey. Spiraling rent prices are also a risk in keeping inflation persistently higher. Shelter inflation, which tracks rent prices and owners’ equivalent rents, is just now picking up on buyers pivot to the rental market. Rent inflation is a critical component of broad price growth, as it represents “more cyclical, more persistent, and more inertial sources of price pressures,” Morgan Stanley economists said in a note. Other economic news released this week suggests that home builders are not rushing to meet the historic inventory shortage. In fact, according to the latest U.S Census Bureau Housing Starts and Permits report, housing starts tumbled more than expected in April, cutting into the 20% jump seen in March. Elevated lumber prices and a decline in construction workers likely weighed on the sector. Permits for new residential units edged higher, but the amount of permitted construction that hasn’t yet been started reached its highest level since 1979.
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Rent for single family homes soared to a 14-year high as the housing boom escalated in March