Real Impact: What the September 2025 CPI Report Means for Rental Housing

Real Impact by Chandan Economics explores how cornerstone data releases influence interest rate forecasts and reshape the rental housing sector's outlook.

Last Updated: October 24, 2025

What Happened:

According to a delayed release of the Bureau of Labor Statistics' September Consumer Price Index Report, prices rose 0.3% month-over-month, a softer pace than most analysts had expected. However, consumer prices rose 3.0% year over year, a slight uptick from August.

Core-CPI inflation increased 0.2% from August, below market expectations of 0.3%. Annual core prices also eased by 10 basis points to 3.0%. Meanwhile, Shelter costs rose just 0.2% over the month, its smallest monthly increase in January 2021.

Impact on Interest Rates:

The September CPI reading is the only official data expected to be released during the ongoing government shutdown, potentially magnifying its impact on the Federal Reserve’s upcoming interest rate decision.

However, the inflation print barely budged Federal Funds Rate futures. According to the Chicago Mercantile Exchange’s Fed Watch Tool, there is a 96.7% probability that the FOMC will slash rates by 25 basis points at its Wednesday policy meeting, roughly in line with the pre-CPI Report forecast.

Forecasts for the year-end Federal Funds Rate edged slightly more dovish, now reflecting a 96.9% likelihood of two or more rate cuts through December, compared to a 91.1% probability the day before.

What it Means for Rental Housing:

The deceleration of price increases has stalled, and annual increases remain well above the Fed's 2.0% preferred target. However, there is also a decreasing number of surprising swings to the upside, including so far, a limited impact from US tariffs.

Elsewhere, the deceleration of shelter prices in the CPI index has coincided with a slowdown in apartment rents published by private and industry-related outlets.

Cotality recently reported a tepid 1.4% year-over-year increase in single-family rental (SFR) rents in August, its slowest annual pace in over 15 years. Meanwhile, as we reported in a recent analysis, Multifamily rents have stalled at around 2% year-over-year.. The additional easing of financial conditions should support greater construction activity over time, likely placing further downward pressure on rents in the short- to medium-term.

Still, shelter-inflation relief will help ease financial constraints for many low- to median-income renters. National rent payment tracking data from Chandan Economics-RentRedi shows an improving picture for on-time rent collections, which has recovered by 90 basis points from an August 2025 nadir to 83.5% in September. The loosening of financial constraints should continue to improve the stability of property incomes.