Let’s review alternate measures of rent, especially new leases.
The BLS explains the New Tenant Rent Index (NTR) and the All Tenant Rent Index (ATR) Research Series.
The New Tenant Rent Index and All Tenant Regressed Rent Index are research index series that use data sourced from data collected in the Consumer Price Index (CPI) Housing Survey. The New Tenant Rent Index (R-CPI-NTR) measures prices renters would face if they changed housing units every period. The rent component of the official CPI measures the change in all rents, including new leases, renewals, and rents in the middle of a lease. In contrast, the New Tenant Rent Index uses only a subset of the data the official CPI uses, namely the first survey observations after new tenants move into their sampled housing units. The All Tenant Regressed Rent Index (R-CPI-ATR) is a measure with a scope similar to the CPI, but using methodology similar to the New Tenant Rent Index. The All Tenant Regressed Rent Index measures the rent paid by all renters, both new and continuing, and incorporates most of the survey data used for the CPI Rent of primary residence index. The All Tenant Regressed Rent Index is published alongside the New Tenant Rent Index to facilitate comparisons.
The New Tenant Rent Index and All Tenant Regressed Rent Index series are currently calculated as quarterly indexes, with observations from three months of the housing survey pooled together. The two series begin in 2005. Every period, the entire series is re-estimated. In the regression method used, new observation pairs influences the index over the entire time spanned by the pair. The most recent periods of a repeat transaction index like the New Tenant Rent Index are prone to large revisions, because the rent observations spanning those periods accumulate gradually as tenants move.
The New Tenant Rent Index and All Tenant Regressed Rent Index were adapted from the “New Tenant Repeat Rent Index” and “All Tenant Repeat Rent Index” of the research article “Disentangling Rent Index Differences: Data, Methods, and Scope“. The article further details the indexes’ construction and uses the index to compare the CPI rent component to other rent indexes. The New Tenant Rent Index and All Tenant Regressed Rent Index are currently calculated as prototype research indexes. Their methodology may change as they continue to develop.
CPI Rent, ATR, NTR Comparison
Chart Notes
OER is a BLS measure that stands for Owners’ Equivalent Rent, the price a homeowner would pay to rent his house, unfurnished, without utilities.
ATR and NTR are indexed to the first quarter of 2000.
BLS data is monthly so I used quarterly averages to produce my chart. I also set the index level to the first quarter of 2000 so that everything is in sync.
Percent Change from a Year Ago
- Rent of Primary Residence: 3.9 percent
- OER: 4.2 percent
- ATR: 2.8 percent
- NTR: -9.3 percent
It was on that last point the rent is crashing calls came out en masse. But I have seen this setup before.
NTR and ATR Confidence Levels
The range of confidence levels of NTR are -1.5 percent to -17.1 percent. The ATR confidence levels are 2.4 percent to 3.2 percent.
I have seen this kind of action before where NTR is revised heavily. The BLS even notes “The most recent periods of a repeat transaction index like the New Tenant Rent Index are prone to large revisions, because the rent observations spanning those periods accumulate gradually as tenants move.”
NTR Is New Tenants Only
NTR has another major flaw in that it is new tenant only. Zillow and Apartment List have the same flaw.
As of 2022 about 25 percent of renters move every year. I suspect that is high due to Covid, but it’s the most recent number we have.
About 65 percent of the population owns a home and 35 percent rent.
Annual moving is 0.35 * 0.25 = 8.75 percent plus some small percent of homeowners moving.
Attempting to extrapolate NTR across the whole market when only about 9 percent of the nation moves is a second serious mistake.
Four Quarterly Rent Indexes
Curiously, the ATR closely tracks OER and OER is the largest component of the CPI by far.
BLS Shelter Components June 2025
- Total Shelter: 35.418
- Rent of Primary Residence: 7.447 percent
- OER: 26.167 percent
The Objection to OER
The big objection that economists have with OER is that nobody pays OER. That’s true. Yet, it is the single largest component of the CPI, by far.
The reason nobody pays OER is that nobody pays themselves rent. People either have a mortgage or own their house free and clear.
When the Fed lowered interest rates to zero percent and kept them there for a year, mortgage rates dropped to 3 percent or below.
Most homeowners refinanced. This put extra money in their pockets every month, helping fuel inflation. We also had three rounds massive fiscal stimulus fueling inflation.
The price of homes soared.
Case Shiller Home Price Index
The Case-Shiller Home Price Index declined another 0.3 percent in May.
Percent Change Since January 2020 (Through May)
- Case-Shiller National: 52.1%
- Case-Shiller 10-City: 52.4%
- OER: 44.9%
- CPI Rent: 28.0%
- CPI: 24.3%
For discussion of the above chart, please see The Housing Top Is Likely In, Case-Shiller Home Prices Drop Again
The problem with the “Nobody Pays OER” theory is that home prices have risen 52.1 percent vs the CPI 24.3 percent and sources like Truflation ignore that massive price hike as if it’s not inflation.
The rationalization for this nonsense is home prices are a capital expense, not a consumer expense.
The silliness of the argument should be obvious: Inflation matters, not just alleged consumer inflation.
CPI Problems Don’t Stop There
The CPI also does not include homeowners insurance or property taxes.
So OER is seriously distorted.
Is Homeowners Insurance Understated in the CPI?
The short answer is grossly so. In fact, it’s nonexistent as most homeowners would understand matters.
The BLS only counts insurance of contents, not fire insurance, not flood insurance, etc., on the building itself.
The BLS weights “Tenants’ and household insurance” as a mere 0.417 percent of the CPI.
For more details and suggestion please see: Is Homeowners Insurance Understated in the CPI?
Do yourself a favor, read that post, and shop around for insurance. We saved $5,000 by switching.
Insurance is a massive part of our expenses, and the BLS ignores it totally. The BLS also ignored property taxes as if they don’t matter.
The BLS Shelter Index Is Totally Screwed Up
Returning to the ATR/NTR index chart, rent (in isolation) is overstated, judging from ATR, not NTR.
Here are the numbers again.
- Rent of Primary Residence: 3.9 percent
- OER: 4.2 percent
- ATR: 2.8 percent
- NTR: -9.3 percent
Throw away the last one as garbage. As a measure of “rent”, I accept ATR over the BLS measure “rent of primary residence”.
But the BLS measure of “shelter” which ignores taxes, the price of homes, and insurance, is garbage.
It’s a mistake economists make, Truflation proponents makes, the BLS makes, and the “nobody pays OER” proponents make.
Things are so damn screwed up with the BLS that I am reluctant to answer my lead question: “How Much Overstated Are BLS Measures of Rent and Shelter? Or Are They?”
And it’s not just shelter.
The BLS has royally messed up food as well. For discussion, please see Where Do You Spend Money on Food? How Screwed Up Are the BLS Weights?
I will have some specific recommendations in a following post.
The problem is, Trump does not want real numbers, he wants numbers that will decline.
Addendum – Chart from 2023 Q4
Year over year percent changes in five measures of rent, All data is end of quarter.
See that 4.74 percent decline. It never happened.
I posted that chart on February 14, 2024 in What’s Really Going on With Rent? Five Measures to Compare
Nearly everyone on the planet looks at that chart and tells me rent is dropping or that it will soon drop.
Rent is not dropping and I have been hearing “soon” for two full years because “the CPI is Lagging”.
Sorry, but year-over-year comparisons do not mean falling prices (see the yellow and green lines two charts back). And importantly, falling prices on new tenant leases do not mean falling prices on existing leases are imminent either.
We can now see that -4.74 was revised to +2.23.
