Housing inflation is easing, but it's still the biggest factor driving prices higher
Shelter costs, which include spending on rent and hotels, rose 0.2% in July and were the primary factor in the 0.2% uptick in inflation across all goods and services, according to Consumer Price Index data released Tuesday.
Rent and owner's equivalent rent, which estimates how much a homeowner would pay to rent an equivalent property, each jumped 0.3% last month from June. Lodging away from home, which includes spending on things like hotels, dropped 1% — one of the few major categories to see a decline.
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All in, shelter costs rose 3.7% in the last year. The rate of housing inflation is decelerating — July's annual increase was the smallest jump since October 2021 — but continues to be hotter than broad inflation. Across all items, prices were up 2.7% annually and 3.1% after stripping out volatile food and energy costs.
'While July's inflation data shows continued moderation in shelter costs, the tariff story may be starting to shift. Indexes for home furnishings and used cars increased, hinting that consumers may be starting to feel the effect of tariffs,' Realtor.com Senior Economist Jake Krimmel said in a statement.
Learn more: What Trump's tariffs mean for your money
Home price appreciation and rent hikes have both generally eased this year as the home sales market remains mired in a deep slump, and robust apartment construction has added new supply in many cities.
Even so, many homebuyers and renters remain stretched at today's prices. On average, rents today are about 30% higher than they were five years ago, and mortgage rates around 6.6%, coupled with home prices near all-time highs, are keeping many would-be homebuyers shut out of the market.
Read more: How to buy a house in 2025
Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.
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