Zillow: CPI Shelter Forecast, May 2026
Zillow forecasts 2.8% rent inflation, 3.3% OER inflation annually in May, as measured by the Consumer Price Index.
Written by Treh Manhertz on June 9, 2026
Update Following 06/10/2026 CPI Release:
The May CPI release showed that housing inflation was higher than expected again, particularly for Rent of Primary Residence.
Seasonally-adjusted CPI for Owner’s Equivalent Rent (OER) increased 0.30%, above our expectation of 0.25%. The index rose 3.32% year over year, versus our expectation of 3.27%.
Seasonally-adjusted CPI for Rent of Primary Residence rose by 0.36%, above our expectation of 0.20%. The index rose 2.92% year over year, versus our expectation of 2.76%.
Other smaller components of Shelter brought the category to a 0.32% increase in May, with spending on hotels up 0.5% and household insurance also up 0.5% for the month.
The gradual decline in housing inflation over recent years seems to have plateaued. Previously these measures were pulled lower by weaker market rents and a declining share of longer-tenure units rented significantly below current market rates. Now, extra heat in rents this spring for listed units have raised new tenant rents while higher costs have given landlords an incentive to raise rents more aggressively across their portfolios. We do not think this upward pressure will be sustained, however. Vacancy rates have increased back to roughly their historic average, meaning that market rents, also near historic averages, will have little impetus to grow further.
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New shelter inflation numbers from the Bureau of Labor Statistics are scheduled to be released on Wednesday, June 10, 2026 at 8:30 ET.
Key Takeaway
CPI housing inflation is now expected to hold near its current pace through the remainder of 2026, an upward revision driven by single-family market rents rising more than expected in April.
Firmer spring new-lease prices should keep measured housing inflation from decelerating as fast as previously assumed, partially offsetting the structural disinflation in shelter. Zillow Research interprets this as normalization at a higher level, not re-acceleration: Market rent growth responds to the gap between the rental vacancy rate and its natural rate. With the vacancy rate having somewhat normalized, the post-pandemic tightness is largely spent.
Shelter components of the CPI are rising at a faster pace than on-market rents, reflecting softer new lease pricing alongside hikes for renewing and longer-term tenants.
The Forecast
| Period | Owners’ Equivalent Rent | Rent of Primary Residence | ||||||
|---|---|---|---|---|---|---|---|---|
| Month-over-month | Year-over-year | Month-over-month | Year-over-year | |||||
| Forecast | Actual | Forecast | Actual | Forecast | Actual | Forecast | Actual | |
| December 2025 | 0.27% | 0.31% | 3.25% | 3.36% | 0.21% | 0.27% | 2.93% | 2.92% |
| January 2026 | 0.26% | 0.22% | 3.29% | 3.26% | 0.21% | 0.25% | 2.78% | 2.84% |
| February 2026 | 0.18% | 0.22% | 3.14% | 3.19% | 0.19% | 0.13% | 2.74% | 2.68% |
| March 2026 | 0.21% | 0.28% | 3.02% | 3.10% | 0.17% | 0.19% | 2.55% | 2.56% |
| April 2026 | 0.44% | 0.53% | 3.20% | 3.30% | 0.39% | 0.55% | 2.63% | 2.79% |
| May 2026 | 0.25% | -- | 3.27% | -- | 0.20% | -- | 2.76% | -- |
| + + + | + + + | + + + | + + + | + + + | + + + | + + + | + + + | + + + |
| December 2026 | 0.24% | -- | 3.32% | -- | 0.21% | -- | 2.83% | -- |
Owners’ Equivalent Rent (OER)
Monthly outlook: Owner's Equivalent Rent, which measures what homeowners would theoretically pay to rent their own homes, is projected to have increased 0.25% in May 2026 (95% confidence interval: 0.12% - 0.38%). This would bring the annual increase in the index to 3.27%. We expect the monthly growth to trend toward a 0.24% pace over the year.
Annual outlook: We forecast OER to rise 3.32% over 2026, keeping pace with the 2025 increase of 3.36%.
Rent of Primary Residence
Monthly outlook: Rent of Primary Residence, which tracks rent payments, is projected to have increased 0.20% in May 2026 (95% confidence interval: 0.05% - 0.34%). This would bring the annual increase in the index to 2.76%. We expect the monthly growth to trend toward a 0.21% pace over the year.
Annual outlook: We forecast the Rent of Primary Residence index to rise 2.83% over 2026, only a slight slowdown from the 2025 increase of 2.92%.
Market Rents
Single-family: Zillow’s expectations for on-market rent growth for single-family units were revised up: Single-family rents are now expected to rise to a 3.2% year-over-year increase by the end of 2026, up from 2.7% in April.
Multifamily: Zillow’s expectations for on-market rent growth for apartments were revised up: Multifamily rents are expected to rise to a 2.1% year-over-year increase by the end of 2026, up from 1.3% in April.
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.
Methodology
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 incorporates:
- Expected on-market rent growth (Zillow’s Observed Rent Forecast, ZORF)
- Assumptions about how landlords adjust rents at lease renewal
- Renter mobility rates, which determine what share of tenants face a market rent increase.
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