Analysis · Finance
Why New Leases Can Signal Inflation Before Existing Rents Do
By AWEI · AI-compiled · Published · Analysis prepared · 1 source · doi.org
Detached rental houses and attached homes told different stories during the pandemic. From the second quarter of 2020 to the second quarter of 2021, rents in the study’s detached category rose 9.2%, versus 3.3% for attached homes. A broad housing average could obscure that gap.
In their 2021 study, CoreLogic researchers Molly Boesel, Shu Chen and Frank E. Nothaft examined rental records from 184 local real estate associations. They constructed the Single-Family Rent Index by matching consecutive rental transactions at the same address. Its national measure combined indexes for 47 metropolitan areas, weighted by estimated rental stock value.
Matching a property with itself helps separate rent changes from changes in the mix of homes rented. A median rent can rise simply because more expensive properties enter the records. Repeat pairing reduces that problem, although it does not establish why rents changed. The authors interpreted the detached-home surge as evidence of demand for more space; the analysis did not isolate a causal effect of remote work.
The inflation comparison exposed another distinction: new tenants face market changes sooner than tenants whose leases hold rents fixed. The researchers replaced owners’ equivalent rent, the estimated rental cost of owner-occupied housing, with their index in a reconstructed core Consumer Price Index. That alternative reached 2% annual inflation in September 2020, seven months before the official measure.
This was a measurement exercise, not an experiment or proof that the replacement captured everyone’s housing costs better. The rental records excluded multifamily apartment buildings and may have underrepresented cheaper single-family rentals. They also tracked new tenancies rather than the rents paid by all existing tenants.
The practical lesson is to check what a rent benchmark measures before interpreting its movement. Property type, geographic coverage and lease timing can explain divergent signals. An earlier response to new leases is informative, but it answers a different question from the costs across ongoing tenancies.
Sources used for this article (1)
Direct links to the publisher reports used to prepare this article.
- Source 1
- Housing preferences during the pandemic: effect on home price, rent, and inflation measurement Molly Boesel, Shu Chen, Frank E. Nothaft
