Rent Inflation Won’t Ebb Until 2026, Cleveland Fed Model Shows

Federal Reserve Chair Jerome Powell said last week central bankers are keeping a close eye on housing inflation, which “has yet to fully normalize.” They could be waiting more than a year.

It may take until mid-2026 for rent inflation in the consumer price index to subside toward its pre-pandemic norm, according to research by the Cleveland Fed. While several measures suggest that new rents in particular are coming down, fewer people are moving and signing new leases — so the sample in the CPI doesn’t capture as much turnover, the researchers said.

Shelter is the largest category in the ...