Bloomberg | Jan 11, 2019 10:58AM ET
(Bloomberg) -- Something unusual is happening in U.S. housing: rental inflation is decelerating even as wage growth picks up.
Over the last several business cycles, faster gains in average hourly earnings have meant faster increases in rental inflation, as landlords have exercised their market power to wrest more money from workers. And since 2011, rental inflation has easily outpaced wage growth.
During the last two years, however, there’s been a reversal of this trend, as rental inflation has moderated and wage growth has picked up. The slowdown in price gains probably reflects a glut of apartments in urban centers across the country.
In December, rental inflation cooled to 3.5 percent, marking the slowest pace since mid-2015, according to data published Friday by the Labor Department.
Separate data released last week showed average hourly earnings for production and nonsupervisory employees -- a group that comprises 82 percent of the private-sector workforce -- were up 3.3 percent from a year earlier, marking the fastest pace of increase of the current economic expansion so far.
If both trends continue, U.S. households may soon find they have a little extra money left over after accounting for increases in the rent for the first time in quite a while.
Written By: Bloomberg
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.