American price pain isn’t limited to the gas pumps and grocery stores. The cost of rent is surging to new peaks as well, posting its biggest gain in more than three decades last month.
The seasonally adjusted index for rent of primary residence increased 0.6 percent from January to February, according to data released by the Bureau of Labor Statistics on Thursday. Bloomberg reported that’s the largest monthly gain for the index since 1987.
The index has been inching upwards in recent months, rising 0.4 percent from November to December. It made a slightly bigger increase from December to January, up 0.5 percent. Without adjustments, the index has risen 4.2 percent year-over-year, suggesting Americans are paying much more for rent than a year ago.
Rents are reported in the Consumer Price Index report with a delay, so rising prices mean they’ll contribute even more to inflation, Bloomberg noted.
“There’s still further strength to be seen,” Wells Fargo senior economist Sarah House told Bloomberg. “We don’t expect that to peak until maybe the third quarter of this year.”
Rent increases are being seen across major markets. In Manhattan, for instance, rents hit $3,700 in February, a record in the market according to a report by appraisal firm Miller Samuel for Douglas Elliman. Rentals were only on the market for an average of 24 days and renters had a one-in-five chance of facing a bidding war.
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Bay Area rents fell during the pandemic, but have since turned to approach pre-pandemic levels. San Mateo rents are reportedly up 17 percent year-over-year as of February, while San Francisco rents are up 16 percent.
Meanwhile, one report found rents in Miami rose 38 percent in 2021, the highest gain in the nation, making the market one of the least affordable in the country.
The rent index rise is part of a larger inflation rise in the country. Inflation jumped 7.9 percent year-over-year in February, reaching its highest level since January 1982, according to CNBC. The war in Ukraine ramped up pressure on the global economy, making inflation woes likely to pile up.
[Bloomberg] — Holden Walter-Warner