“Rents will be soaring in the coming months, especially for apartment units, as homebuilding retreated in July. There was a housing shortage before the pandemic, and the shortage has been exacerbated during the pandemic. Therefore, homebuilding needed to be greatly ramped up as the jobs recovery took hold. Yet in July, housing starts fell by 7% — single family construction is down by 4% and multifamily construction is down by 13%. Other factors holding back construction: supply-chain disruptions in getting the right material on a timely basis, lags in getting approvals for land lot development, and labor shortages.
With home prices having risen by record amounts over the past year, homebuying will become an increasing challenge, and a good number of households may simply decide to rent. In addition, the jobs recovery is enticing people out of their parents’ homes to seek their own housing. Consequently, rental demand is rising strongly. With an inadequate supply of available homes, rents will be strengthening and adding further pressure to overall consumer price inflation.”