<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Mark Whitehouse</p>&#xD; &#xD; <p>A moribund real-estate market should have the advantage of reducing peoples' housing costs. Unfortunately, for the growing ranks of U.S. families who rent their homes, the opposite is happening.</p>&#xD; &#xD; <p>Shelter costs in the U.S. -- a category that includes houses, apartments, hotels and college dorms -- rose at an annualized rate of 2.7 percent in the three months through July, the Labor Department reported Thursday. That's the fastest rate of growth since January 2008, just after the recession began (see chart).</p>&#xD; &#xD; <p>The trend reflects increasing demand for rentals as foreclosures force some people out of the ownership market, tight-fisted banks prevent others from getting mortgage loans, and falling housing prices make homes less attractive as an investment. As of June, the U.S. rental vacancy rate stood at 9.2 percent, the lowest level since 2002.</p>&#xD; &#xD; <p>Rising rents present a problem for Federal Reserve Chairman Ben S. Bernanke as he tries to balance his inflation-fighting mandate with the need to support an exceedingly weak recovery. Shelter, which accounts for about 32 percent of the consumer-price index, has the potential to produce enough inflation to tip the scales against another round of monetary stimulus.</p>&#xD; &#xD; <p>The government is considering one lever to ease shelter costs: Rent out some of the hundreds of thousands of homes on which Fannie Mae and Freddie Mac have foreclosed. It's hard to know whether doing so would make much difference, because many of the homes might be in places where people don&#x2019;t want to live. But it's probably worth a try.</p>&#xD; &#xD; <p>(Mark Whitehouse is a member of the Bloomberg View editorial board.)</p> </body> </html>