In September, NAHB’s Real Rent Index increased 0.2 percent over August’s reading, after essentially no growth between June and August (Figure 1). Over the first nine months of 2019, the average monthly growth rate of the Real Rent Index was 0.13%, slightly higher than the average of 0.11% in 2018.
NAHB constructs a “real” rent index to indicate whether inflation in rents is faster or slower than overall inflation. It provides insight into the supply and demand conditions for rental housing. When inflation in rents is rising faster (slower) than overall inflation, the index rises (declines). The index is calculated by dividing the price index for rent by the core CPI (to exclude the volatile food and energy components).
A previous NAHB post shows that the Consumer Price Index (CPI) in September was flat from August on a seasonally adjusted basis, and “core” CPI rose by 0.1 percent during the same period.