Economic Insights

Shelter Costs Accounted for Nearly 90% of Rise in Core Inflation in September

Economic Insights
Economic Insights from the MIAMI REALTORS Chief Economist

By Gay Cororaton, MIAMI REALTORS Chief Economist


The cost of housing has taken center stage in  the battle to bring back inflation to 2%. CPI-Shelter accounted for 88% of the monthly increase of core inflation and 53% of headline inflation with CPI-Shelter up 0.6% from the prior month compared to 0.3% of the prices of goods less food and energy (core inflation). On a 12-month period, inflation was at 3.7%, and core inflation was at 4.1%, while  the CPI-Shelter index[1] rose 7.2%.

While the surge in prices in 2021-2022 were mainly due to supply shocks (impact of the COVID-19 pandemic on supply chains and the effect of the Russia-Ukraine war on oil prices and grains like corn and wheat), the impact of mortgage rates on housing  and inflation are critical to controlling inflation.

Yes, nationally, rents are starting to decline. In its September Report, Yardi[2] reported that the average asking rent fell $6 in September, or 0.8% year-over-year, due to the largest increase in supply of multifamily listings. In August, MIAMI MLS and RentalBeast[3] data showed that the median asking rent on multifamily units fell in Miami-Dade County  (-3.2% y/y) and in Broward County (-4.8%). However, asking rents were up in Palm Beach County (4.2%) and in Martin County (18.1%).

However, the continued rise in mortgage rates poses upward inflationary risks by pushing demand towards renting and constraining housing construction. As of the week ended October 12, Freddie Mac reported that the average contract rate on 30-year fixed conforming loans rose to 7.57%.

On  the demand side, higher rates increase the cost of a mortgage, incentivizing renting rather than owning.  For example, at the current median sales price on single-family homes of $620,000 in Miami-Dade County, a 0.5% increase in mortgage rate increases the monthly mortgage  by $190 per month (from $ 3,739 to $3,928).

On the supply side,  higher borrowing costs are making a home construction harder to pencil out. Nationally, 5+ unit housing starts  fell to an annualized rate of 1.2 million annualized after hitting 1.283 million in August, after surging to 1.58 million in May 2023.

Builder confidence in the market for newly built single-family homes in September fell five points to 45, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI)[4]

The Federal Reserve Board Senior Loan Officer Opinion Survey reported that about half of officers reported tightening standards on C&L lending to middle and large firms.

I had the opportunity to share these insights at the Engaging Economics webinar with Mark Zandi, Chief Economist of Moody’s Analytics and Dr. Laurence M Ball, Professor of Economics at Johns Hopkins University, moderated by Prakash Loungani, Program Director and Senior Lecturer at The Johns Hopkins University.

You can watch or listen to the webinar at

[1] CPI-Shelter index measures the rent on primary residence and the implied rent on owned housing.

[2] Yardi Matrix > Matrix Multifamily National Report-September 2023

[3] South-Florida-Residential-Rental-Market-Report-August-2023.pdf (

[4] High Mortgage Rates Continue to Weaken Builder Confidence – NAHB

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