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Is the rental vacancy rate a leading signal for the housing market?

Summary:
Is the rental vacancy rate a leading signal for the housing market? Here is something I noticed while putting together my piece yesterday on the housing market. Three of the series — new home sales, existing home sales, and single family starts — all peaked last November: That made me go back and think about an anomaly I had noticed, but hadn’t figured out, with regard to the rental vacancy rate: which, according to the graph, peaked in the 3rd Quarter of last year, and has declined since. It occurred to me that this is probably not a coincidence. If housing unaffordability has become a real constraint for potential buyers, then there should be an increasing number of such buyers who are forced to rent instead — which would drive down the

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Is the rental vacancy rate a leading signal for the housing market?

Here is something I noticed while putting together my piece yesterday on the housing market.

Three of the series — new home sales, existing home sales, and single family starts — all peaked last November:

Is the rental vacancy rate a leading signal for the housing market?

That made me go back and think about an anomaly I had noticed, but hadn’t figured out, with regard to the rental vacancy rate:

Is the rental vacancy rate a leading signal for the housing market?

which, according to the graph, peaked in the 3rd Quarter of last year, and has declined since.

It occurred to me that this is probably not a coincidence. If housing unaffordability has become a real constraint for potential buyers, then there should be an increasing number of such buyers who are forced to rent instead — which would drive down the rental vacancy rate.

It also looks like the rental vacancy rate peaked in 1997-98 and early 2004, in advance of the last two cyclical housing peaks, which I suspect is also not a coincidence.

So, is there a leading signal for the housing market in the rental vacancy rate? My preliminary perusal makes me think it’s complicated. I’m chewing it over.

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