Could Housing Inflation Become a Problem Again?

Apollo Chief Economist

After the Fed pivot in November 2023, lower mortgage rates, rising stock prices, and increased activity in capital markets have put upward pressure on rents in Manhattan, see the first chart below.

Over the same period, easy financial conditions have boosted the housing market, with home prices currently up 7.3% over the past 12 months.

With this backdrop, the risks are rising that shelter inflation may begin to flatten out over the coming months and maybe even rise later this year, see the second chart.

The Fed will have to keep interest rates higher for longer to prevent housing inflation from becoming a problem again.

Manhattan median rent increased to $4220 in April 2024
Source: Elliman, Apollo Chief Economist
Rebound coming in housing inflation
Source: Haver Analytics, BLS, S&P, Apollo Chief Economist

Download high-res chart(s)

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