Where Is Shelter Inflation Headed?

Kmetz, Augustus; Louie, Schuyler; Mondragon, John

Journal Article

Where Is Shelter Inflation Headed?

Abstract: Shelter inflation has remained high even as other components of inflation have fallen. However, various market indicators, including house prices and rents, suggest that the housing market has slowed significantly with the rise in interest rates. Forecasting models that combine several measures of local shelter and rent inflation can help explain how recent trends might affect the path of future shelter inflation. The models indicate that shelter inflation is likely to slow significantly over the next 18 months, consistent with the evolving effects of interest rate hikes on housing markets.

Keywords: housing; inflation; shelter inflation; interest rates;