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Housing inflation: a welcome mat for consumers?

August 20, 2025

Shelter costs helped to offset tariff-driven goods inflation in July’s Consumer Price Index (CPI) print. The trend of disinflation in rent of primary residence and owners’ equivalent rent (OER: the amount of rent a homeowner could receive if they were to rent out their property on the open market) continued. “Put these two line items together and housing inflation rose 3.3% annualized in July, modestly below the pre-pandemic average, with plenty more disinflation in store as market rents remain weak, vacancies continue to creep higher, and home prices continue to fall in many regions,” said Garrett Melson, Portfolio Strategist, Natixis Investment Managers Solutions. 


Shelter CPI (5/31/12 to 7/31/25)
Shelter CPI (5/31/12–7/31/25) *Source: Bloomberg.

Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

  • Rent of primary residence rose 0.256% in July, a pickup from the 0.227% pace in June, while OER fell from 0.304% in June to 0.278%.* 
  • These two components of the housing basket are a large part of the overall inflation print: 33.6% of CPI and 42% of core CPI (excludes food and energy prices).*
  • Core goods represent just 19% of the CPI basket and 24% of core CPI.*
  • On a year-over-year basis, headline CPI held steady at 2.7%, while core CPI ticked higher from 2.9% to 3.1%.*

This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Natixis Investment Managers, or any of its affiliates. The views and opinions expressed may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted, and actual results may vary.

All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided. Investors should fully understand the risks associated with any investment prior to investing.

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