The Real Home Price

Interpretation

The real home price takes into account the effects of inflation and therefore allows for better comparison over time. The ratio in the chart above divides the Case-Shiller Home Price Index by the Consumer Price Index (CPI).
The Case-Shiller Home Price Index is a widely recognized measure of the price level of existing single-family homes in the United States. Developed by Robert J. Shiller and Karl E. Case, it is considered the leading indicator of US residential real estate prices. The index is based on a scale of Jan 2000=100 and is multiplied by 1800 to approximate the average sales price of houses sold in the United States.
When inflation is high, prices as measured by the CPI increase and the purchasing power per unit of currency decreases. The Case-Shiller index has a base of Jan 2000=100 while the CPI has a base of 1983=100. Therefore, it is the trend over time that is significant, and not the absolute ratio values.

Data Sources

• Recent data
• Federal Reserve Bank of St. Louis: US Home prices since 1983
• Federal Reserve Bank of St. Louis: CPI since 1913
• Historical data
• Robert Shiller Online Data: Historical US Home prices until 1983
• Robert Shiller Online Data: CPI from 1871 until 1913

Further Information

• TradingView Chart: S&P Case-Shiller US National Home Price Index / Consumer Price Index for All Urban Consumers
• BIS: Interest rates and house prices in the United States and around the world
• Investopedia: What is Inflation?

Interpretation

This chart displays the Case-Shiller Home Price Index and US Consumer Price Index (CPI) over time.

Page created by Will Beaufoy