The Rent Is Too D@mn High!

The Fed's ultra-easy monetary policies, in response to the pandemic, caused home prices to soar, and now rents are soaring. Over the 24 months through May, the median single-family home price is up a whopping 44.5%. This year's jump in mortgage rates only exacerbated the affordability problem facing first-time would-be homebuyers. As a result, many of them have no choice but to rent.

Today's CPI report showed that rent of primary residence rose to 5.8% y/y, the highest since the mid-1980s (chart below). Previously, we've shown that this measure of rent inflation closely tracks wage inflation. Rents have been rising almost as fast as wages over the past year or so. In some urban areas, they've been rising faster, thus forcing workers to spend more of their budgets on rent.