Mortgage News February 18, 2023
For the first time since the end of 2020, Gen Z and millennial renters are experiencing lower inflation rates than the overall U.S. population, according to a new report from Redfin. The average American experienced a 6.5% increase in the cost of goods and services in December compared to 5.6% and 6.1% for Gen Zers and millennials.
That’s good news for young renters, whose inflation rates skyrocketed last year as rental prices shoot up. Using the US Bureau of Labor Statistics’ Consumer Price Index (CPI) as a measure of their spending habits, Redfin evaluated the cost of goods and services for Gen Zers and millennials. Redfin’s data on asking-rent prices are used to calculate inflation rates for millennials and Gen Zers entering into new leases based on a calculation that weighs each component of inflation, including food, fuel, shelter, and other variables.
As a result of slowing rental price growth, Gen Zers have also had a lower inflation rate overall since the beginning of 2021 than consumers overall. Overall, Gen Zers’ inflation rate came in at 6.4% in December, including renters and homeowners. In comparison with the general population, millennials have a higher rate of 6.8%.
The majority of young adults who sign a new lease are benefiting from cooling inflation sooner than the average American. This is due to the fact that rents are increasing more slowly than the overall cost of housing. In December, the median annual increase in new U.S. leases dropped from 16% last July to 4.8%, the smallest increase in a year and a half. By contrast, the CPI reports an increase of 7.5% in overall shelter costs. In January, the average U.S. worker’s hourly wage rose 4.4% over last year.
Falling demand is slowing rental price growth, as relatively few people are moving or planning to move. Many Americans are unable to afford to move to a new rental due to skyrocketing rental costs over the last year and a half and inflation in other areas of their lives.
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