In areas with inelastic local housing supply, monetary or fiscal expansions lead to higher inflation in housing rents than in areas with more elastic supply.

False

Credible evidence contradicts the statement. Learn more in Methodology.

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oversight

Not applicable; statement based on the report's mechanism explanation.

Source summary

A White House research report finds that state and local economic conditions cause deviations from the national inflation average and documents that, across multiple measures and aggregations, liberal states and cities within them experienced higher inflation over the past year than conservative counterparts. The report highlights housing supply elasticity as a mechanism: where housing supply is relatively inelastic, monetary or fiscal expansions tend to raise local prices (particularly rents) more than quantities.

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Latest fact check

Primary research indicates rents are relatively inelastic to monetary or fiscal expansions, especially where local housing supply is inelastic. The BIS (December 2024 BIS Quarterly Review) finds rents respond little to policy shocks across supply elasticities, while price movements drive the price-to-rent ratio. An IMF Working Paper (February 2024) similarly reports limited monetary-policy transmission to rents and emphasizes that CPI housing costs track house prices more than rents in supply-constrained regions. Federal Reserve work (2020) and related literature emphasize rents are sticky and respond less to demand shocks than prices, while Diamond (2013) shows lower elasticity of supply can amplify rents via tax and spending channels rather than creating higher rent inflation from demand expansions. Verdict: False — the evidence does not support the claim that expansions produce higher inflation in housing rents in areas with inelastic supply; rents tend to be sticky and inflationary effects arise mainly through house prices, not higher rents.

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Timeline

Update · Dec 24, 2025, 12:26 AMFalse
Primary research indicates rents are relatively inelastic to monetary or fiscal expansions, especially where local housing supply is inelastic. The BIS (December 2024 BIS Quarterly Review) finds rents respond little to policy shocks across supply elasticities, while price movements drive the price-to-rent ratio. An IMF Working Paper (February 2024) similarly reports limited monetary-policy transmission to rents and emphasizes that CPI housing costs track house prices more than rents in supply-constrained regions. Federal Reserve work (2020) and related literature emphasize rents are sticky and respond less to demand shocks than prices, while Diamond (2013) shows lower elasticity of supply can amplify rents via tax and spending channels rather than creating higher rent inflation from demand expansions. Verdict: False — the evidence does not support the claim that expansions produce higher inflation in housing rents in areas with inelastic supply; rents tend to be sticky and inflationary effects arise mainly through house prices, not higher rents.
Original article · Dec 23, 2025
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