A significant potential contributor to the continuing decline in inflation is the rent people pay and the equivalency in rent owners would have paid. These measures are still on accelerating paths, with annual gains of 7.9% and 7.1%, respectively-their highest rise since the early 1980s. These huge gains are a result of the housing shortage and historically low rental vacancy rates. But lagging data shows the housing shortage is not as acute as previously thought. The rental vacancy rate was 6% in the third quarter of 2022, up from 5.8% a year earlier, and overall sale inventory is up 2.7% in December. Data on new lease rates from apartment property managers show a marked slowdown in gains.

 

As to the economy, there could be a recession-or maybe not. GDP is sliding along the near-zero growth line, but strong job creation is a bright spot. Despite layoffs in some industries, overall job openings still exceed the number of unemployed by a 7-to-l ratio. Net job creation will be around l million to 2 million this year. The people who take those jobs are future homeowners.