Inflation rate edges lower; Multifamily deemed ‘winner’ for future demand; Jobless claims increase

Annual consumer inflation posted at 2.4% in March, down from 2.8% in February, though analysts cautioned that upward price pressures from pending and recently enacted trade tariffs are likely on the way in coming months.

Labor Department data released Thursday showed the shelter category, including rents and related housing costs, still weighed heavily in overall inflation with a 4% annual increase, though the rise from February was relatively small at 0.2% and the category has been trending lower over the past six months.

Consumers continued to face pressure on food prices, which rose 3% on an annual basis, though energy costs declined 3.3%, aided by a nearly 10% drop for gasoline. Economists and corporate leaders have warned that recent monthly declines in overall inflation could be reversed by newly enacted tariffs on imported items like steel, aluminum and agricultural products.

An additional 10% base tariff on goods from most countries is slated to take effect in 90 days. Also, the U.S. and China, which provides a large array of goods purchased by American consumers, remain locked in a reciprocal tariff war that has jolted stock markets and is expected to further raise prices for consumers and businesses unless disputes are resolved.

Forecasters at Oxford Economics predict new household formations will help boost U.S. demand for apartments over the next five years as new construction slows, as other analysts warn that most real estate categories face lingering challenges from cooling demand and rising development costs.

Oxford researchers said existing apartment owners and investors could capitalize in an environment where new households are forming but leaning toward rental housing as single-family affordability remains a challenge. “Meanwhile, higher construction costs and a slowing economy will accelerate the slowdown in new apartment supply,” Oxford economists Nancy Vanden Houten and Abby Rosenbaum said in a report.

While Oxford has downgraded its near-term commercial real estate outlook due to recently enacted trade tariffs, “we anticipate apartments will be a relative ‘winner’ in the U.S. as renters are stickier,” the report said.

The forecasting firm expects about 2 million new renter households to form in the U.S. over the next five years, and half of those will live in buildings with five or more units. Apartment occupancy peaked in 2021 before dropping dramatically due to elevated supply in 2024, though Oxford analysts expect slowing construction and rising demand to boost occupancy and rents over time. 

Initial claims for U.S. unemployment insurance reached 223,000 for the week ended April 5, rising 4,000 from the prior week but remaining within the past year’s range of 200,000 to 250,000 weekly claims, according to the latest Labor Department data.

The government Thursday said continued claims, reported on a more delayed basis, totaled about 2.1 million for the week ended March 22, down 15,000 from the previous week but higher than the nearly 2 million figure for the comparable week of 2024.

“The jobless claims data are consistent with a labor market that is healthy enough to allow the Federal Reserve to keep policy on hold while it monitors the path of inflation as tariff effects fully kick in,” Nancy Vanden Houten, lead U.S. economist at Oxford Economics, said in a Thursday statement.

“The labor market will weaken this year in response to tariffs, but we think the Fed will delay rate cuts as long as possible and won’t resume loosening monetary policy until December,” Vanden Houten said. The Fed’s next rate-setting meeting is scheduled for May 6-7.