Zillow: CPI Shelter Forecast, June 2025
New shelter inflation numbers from the Bureau of Labor Statistics are to be released on Tuesday, July 15, 2025 at 8:30 ET.
Here’s what our forecast says:
Market rents are still expected to rise in the near term—albeit at a slower pace—which will moderate the pace of decline in CPI housing inflation measures.
We now forecast seasonally adjusted Owner’s Equivalent Rent (OER) will increase by 0.30% in June, a modest uptick from the 0.27% gain in May. We continue to forecast a 3.5% year-over-year increase in OER by the end of 2025, with an additional 2.3% increase anticipated in 2026.
Similarly, seasonally adjusted Rent of Primary Residence is projected to rise 0.28% in June, up from 0.21% in May. We forecast a 3.2% year-over-year increase in Rent of Primary Residence by year-end, followed by a 2.0% increase in 2026.
While the trend continues to point toward a deceleration in rent growth, the slight monthly uptick in CPI rent and OER may reflect statistical noise or mean reversion following last month’s weaker-than-expected print. Given the lagged nature of these measures and the gradual passthrough from market rents, occasional month-to-month volatility is not unusual, even in a broader disinflationary environment.
Zillow’s outlook for on-market rent growth in 2025 was revised slightly downward. Rents for single-family homes are now expected to increase by 2.7%, while multifamily rents are expected to rise 1.3%. The shelter components of the CPI continue to increase at a faster pace than these on-market rent trends, reflecting not only new lease pricing but also rent changes for renewing and longer-term tenants.
These forecasts are based on predictions from a model that makes explicit the relationship between on market rents, measured by the Zillow’s Observed Rent Index, and the shelter components of the Consumer Price Index (CPI). The model accounts for expected on-market rent growth (Zillow’s Observed Rent Forecast, ZORF), assumptions over how landlords adjust rents upon lease renewal , and renter mobility rates, which influence the share of renters subject to market rent increases.
