Rents still rising with regional riffs : Rent CPI has been outpacing headline CPI for 20 years

If you’ve been paying rent just about anywhere in the United States, you likely already know that rent has been going up. And the FRED graph above shows exactly that. Average rent in U.S. cities has risen by 85% in just the past 20 years. That’s 30 percentage points above the 55% inflation that’s occurred between then and now (July 2021, at the time of this writing).

Rent growth in the Northeast and South has stayed close to the national average in recent years, while growth in the West has surpassed the national average. The exception is the Midwest, where the regional average has lagged a bit behind the national average. But average rent in all regions still outpaces inflation, with Midwest rent growth remaining the closest (only 7 percentage points above). Since the end of the COVID-19-induced recession, though, inflation has grown faster than rent, potentially a result of the COVID-19-related financial stimulus and rent relief in the form of eviction moratoriums.

The second graph shows that rent growth in specific urban areas pretty closely matches the corresponding regional growth from the first graph. Renting is largely an urban phenomenon, so it shouldn’t be a surprise the biggest cities in these regions accurately reflect the regional trends: Rents in Boston, Detroit, Houston, and Seattle have all grown at rates that very closely track the rates in the Northeast, Midwest, South, and West.

Given these rent increases, are there changes in regional population growth—say, population booms in places with smaller rent growth and busts in places with higher rent growth? Not quite.

Our last FRED graph shows the population growth of two urban areas that are above the U.S. average and two areas that are below it. This dividing line doesn’t separate areas of slow rent growth from areas of fast rent growth, however: Cities like Boston and Houston, with average rent increases, can land in either quadrant. Cities like Seattle are in the upper quadrant despite their high rent increases, and cities like Detroit are in the lower quadrant even with their low rent increases.

FRED allows you to create all kinds of data agglomerations and exercises, so you can examine these and other influential factors, such as vacancy rates, opportunities for building, and income growth.

How these graphs were created:
First graph: Search for “CPI rent primary residence south” and select the series shown. From the “Edit Graph” panel, use the “Add Line” tab to search for and select the other series by replacing “south” with “west,” “northeast,” and “midwest.” Then add the rent CPI for the U.S. and the general CPI series. Change “Units” to “Index (Scale value to 100 for chosen date),” use “2001-01-01″ as the chosen date, and click “Apply to all.” In the “Format” tab, make the last two lines dashed. Adjust the date range to start on 2001-01-01. Second graph: Repeat the above, but for rents in Seattle, Boston, Houston and Detroit. Third graph: Repeat the above, but for populations of the same cities and the U.S. population.

Suggested by Reed Romanko and Christian Zimmermann.

Categories: Research