"We project that shelter inflation will continue to decline over the next few months," San Francisco Fed economists Oscar Jorda and Aren Yalcin wrote, highlighting that a model estimating the balance of supply and demand in housing supports this prediction.
"On net, rental prices eventually slow down, but they do so more gradually than prices of other goods and services whose supply is less sensitive to interest rates," the economists noted, emphasizing the unique nature of housing costs amid interest rate changes.
"Taken together, these measures suggest that shelter inflation will continue to decline toward more traditional levels over the next year," Jorda and Yalcin concluded, indicating optimism for easing housing costs.
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