As a result of the pandemic, the demand for single-family homes soared, and so did their prices. Rising mortgage rates last year clobbered affordability for first-time homebuyers, forcing them to rent. So tenant rent inflation soared from about 2.0% y/y in early 2021 to 8.6% in the CPI during January of this year (chart).
Rising mortgage rates also reduced the supply of homes. Since many homes have been financed at record-low mortgage rates in recent years, more would-be sellers than usual chose to stay put instead of sell and have to pay higher rates on their new home.
