Mixed Economic Signals Create Uncertainty for Rental Housing Outlook

During the past few days, there was a flurry of releases of measures that could have provided some guidance on where the economy is headed and, in turn, indicated near-term prospects for the rental housing market. Instead, what we got was noisy data, including contradictory info that perhaps left us with more questions than answers.

Let’s explore the headlines.

Consumers Are Feeling Better-ish. The University of Michigan Index of Consumer Sentiment came in at a score of 52.5 for May, matching the April reading and halting a pattern of month-over-month deterioration seen throughout 2025. Still, the current sentiment level is way off the late 2024 high of 74.0. In a similar measure of consumer perceptions, The Conference Board’s Consumer Confidence Index registered at 98.0 in May, improving by a whopping 12.3 points from the April figure after having dropped from a recent high of 112.8 in late 2024.

On the Other Hand, CEOs turn Gloomy. The Conference Board’s Measure of Chief Executive Officer Confidence painted a discouraging picture as of 2Q. The reading of 34 (below 50 means more pessimistic than optimistic responses) plunged 26 points from the level registered at the beginning of 2025. A stunning 83% of the survey participants now say they expect a recession will occur in the next 12 to 18 months.

Corporate Profits Falter. Perhaps shaping those CEO outlooks, corporate profits for 1Q slide by $181.1 billion in a quarter-over-quarter momentum shift, as reported by the Commerce Department’s Bureau of Economic Analysis (BEA).

Inflation Hasn’t Ticked Up (Yet). The Federal Reserve Bank’s favored inflation measure is the BEA’s calculation of Personal Consumption Expenditures (PCE). Overall PCE for April came in at 2.1% and “core” PCE – minus food and energy costs – registered at 2.5%. Thus, we’re still waiting on a broad signal that tariffs are driving up consumer prices in a meaningful way.

This mix of positive, negative and so-so economic data suggests that the Fed will leave interest rates unchanged just ahead, that businesses could be somewhat hesitant to forge ahead on hiring that may have been in their plans, and that consumers might put off decisions that will have big impacts on their wallets.

For the rental housing market, look for some vulnerability in new household formation and net demand momentum but really strong retention of current renters as existing leases expire.