Comparing Measures of Housing Inflation

Bengali, Leila

Journal Article

Comparing Measures of Housing Inflation

Abstract: Measuring the price of shelter for homeowners is difficult, even when housing markets are stable. A new measure of shelter price inflation uses mortgage, tax, and insurance payments, rather than the implied rental value of homes used in the consumer price index (CPI). The payments method suggests year-over-year shelter price inflation rose 4.3% nationally in July, compared with the CPI’s 5.8% estimate. Conditions in rental markets likely explain this difference. Comparing the varying results nationally and across regions highlights the challenge of accurately measuring the shelter inflation that homeowners face.

Keywords: house prices; homeowners; consumer price index (CPI); owners’ equivalent rent;