Disentangling Rent Index Differences: Data, Methods, and Scope

Abstract

Prominent rent growth indices often give strikingly different measurements of rent inflation. We create new indices from Bureau of Labor Statistics (BLS) rent microdata using a repeat-rent index methodology and show that this discrepancy is almost entirely explained by differences in rent growth for new tenants relative to the average rent growth for all tenants. Rent inflation for new tenants leads the official BLS rent inflation by four quarters. As rent is the largest component of the consumer price index, this has implications for our understanding of aggregate inflation dynamics and guiding monetary policy. File is available with NTRR and ATRR indices through 2022q3.

Post‐COVID inflation dynamics: Higher for longer

“…We incorporate short‐term information in housing services by use of a short‐term housing services forecasting model, informed by Adams et al (2023). This paper uses confidential Consumer Price Index (CPI) rent microdata to demonstrate that new‐tenant rents lead official CPI rents (the ultimate source of the housing services inflation information in the core PCE) by about four quarters and that the CoreLogic Single‐Family Rent Index (SFRI) has historically tracked a CPI‐microdata‐based new‐tenant rent index fairly well.…”

“…Core services ex‐housing inflation is projected to steadily decelerate from 4.4% to 3% by the end of 2025. Housing services inflation is projected to decline at a steady rate through mid‐2024, but then its downward progress stalls out, likely reflecting the sluggish dynamics of rent (see Adams et al, 2023; Gallin & Verbrugge, 2019). During 2025, it settles in at a 5.3% pace.…”

Post-COVID Inflation Dynamics: Higher for Longer

“…We incorporate short-term information in housing services by use of a short-term model, informed by Adams et al (2022). This paper uses confidential CPI rent microdata to demonstrate that new-tenant rents lead official CPI rents (the ultimate source of the housing services inflation information in the core PCE) by about 4 quarters, and that the CoreLogic Single-Family Rent Index (SFRI) has historically tracked a CPI-microdata-based new-tenant rent index fairly well.…”

“…Then its downward progress slows so that it decelerates to 3.4 percent by the end of 2025. Housing services inflation is projected to decline at a steady rate through late 2024, but then its downward progress stalls out, likely reflecting the sluggish dynamics of rent (see Adams et al, 2022 andGallin and. During 2025, it settles in at a 4.5 percent pace, before continuing to decline briskly, reaching 3.8 percent by early 2027.…”

House Prices and Rents in the 21st Century

“…Our final stage regression is a repeat of the first stage, with each observation divided by the square root of the fitted value from the second stage. We do not weight the rental transactions because, in practice, these weights matter little for repeat rent indices (Adams et al 2022).…”