The July Consumer Price Index out Thursday shows inflation ticking up — almost wholly due to shelter inflation. But how the Bureau of Labor Statistics calculates the price people pay for housing includes some lagging data. So, while shelter inflation is still at 7.7% year-on-year, economists are incorporating new, more timely data into their forecasts that shows a cooling of housing prices.

The thing about the rental data the government uses to calculate the Consumer Price Index is that, as San Francisco Federal Reserve economist John Mondragon told us, “It can be really sticky. If you’re renting an apartment, you signed, say, typically a one year lease, your rent is going to be fixed for that year.” 

So if you’ve been in your apartment for ten years, your rent could be much lower than a new renter’s. Which is why Mondragon also likes to look at other data to see, “People who are moving today, what are they paying?”

Zillow is one place to look for asking rents, said Kitty Richards with the Groundwork Collaborative.

“Housing costs inflation has actually been cooling since last summer, and is already down to pre-pandemic levels,” Richards said.

During the pandemic, lagging shelter inflation data failed to capture the sudden increase in rents, said Harvard University lecturer Judd Cramer.  

“So what people are hoping is that now the pattern sort of reverses itself. Shelter inflation works itself back down to 2%, 3%, even 0%,” Cramer said.

Cramer said the BLS is looking at experimental measures to help track real-time rent inflation data.

Problems with affordable housing aren’t going away, said economist Robert Dietz with the National Association of Home Builders.

“We’ve got the tightest housing market for more than 40 years,” Dietz said.

He said the more policy makers can increase the supply of houses, the more the price of housing will cool.