WASHINGTON – The U.S. residential rental vacancy rate dropped further in the third quarter as the economy continued to normalize after severe disruptions caused by the COVID-19 pandemic, potentially indicating that high inflation could last for a while.
The Commerce Department said on Tuesday that the rental vacancy rate fell to 5.8% last quarter, the lowest since the second quarter of 2020. That was down from 6.2% in the April-June period and 6.4% a year ago.
The collection of data was affected by the coronavirus last year and part of 2021. The Census Bureau, which compiles the report, said the pandemic-related restrictions on data collection had ended in almost all areas in the third quarter, adding that less than 0.5% of cases were affected.
The rental vacancy rate is being closely watched as the debate over whether the current phase of high inflation is transitory heats up. Rents increased by the most since 2001 in September, helping to boost consumer prices that month.
Rents are one of the sticky components of inflation, which is running well above the Federal Reserve’s flexible 2% target. Workers returning to offices and schools reopening for in-person learning, thanks to COVID-19 vaccinations, are boosting demand for rentals following a slump as Americans fled cities for suburbs and other lower-density locations early in the pandemic.
In the third quarter, the median asking rent for vacant units was $1,203. That was down from $1,228 in the second quarter, but up from $1,160 a year ago. Rental vacancy rates were lowest in the Northeast and West and higher in the South and Midwest.
The homeownership rate was little changed at a seasonally adjusted 65.4% last quarter. In the third quarter, the median asking sales price for vacant homes was a record $285,500.
High home prices amid tight supply could keep demand for rentals elevated.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
