Zillow: CPI Shelter Forecast, May 2025

New shelter inflation numbers from the Bureau of Labor Statistics are to be released on Wednesday, June 11, 2025 at 8:30 ET.

Here’s what our forecast says:

A decline in forecasted market rent growth led to slight downward revision from last month’s estimates of near-term housing inflation. We now forecast May seasonally adjusted owner’s equivalent rent to rise by 0.29%, a downshift from the 0.36% increase in April. We forecast a 3.5% year-over-year increase in owner's equivalent rent by the end of this year, with an additional 2.4% increase anticipated in 2026.

Similarly, seasonally adjusted rent of primary residence is expected to increase by 0.27%, lower than April’s 0.34% increase. We forecast a 3.3% year-over-year increase in rent of primary residence by the end of this year, with an additional 2.1% increase anticipated in 2026.

Zillow’s forecast for on-market rent growth for single-family homes was revised down significantly, now expected to rise only 2.8% over 2025, 1.6% for multifamily. The shelter measures of CPI continue to rise above this pace, reflecting not just on-market rent trends but also increases in rents paid by moving and lease-renewing tenants.

Our forecast is 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), which seek to approximate average rents for both new and renewed leases. This modeled relationship incorporates expected rent growth in on-market rents (Zillow’s Observed Rent Forecast, ZORF), assumptions over how current landlords respond to changes in market rent when keeping or raising current rent on a lease renewal, and mobility rates of renters – which determines the share of renters facing a market rent increase.