(Click on image to enlarge)

The national and 10-city Case-Shiller indexes have dropped four months.

Case-Shiller National, Top 10 Metro, CPI, Rent

(Click on image to enlarge)

Chart Notes

OER is the BLS measure Owners’ Equivalent Rent, the price homeowners would pay to rent their own home unfurnished, without utilities.

Case-Shiller measures sales prices of the exact same home over time. It factors out major improvements.

It a better measure than median or average prices because the latter does not factor in square footage, location, lot size, or amenities.

However, Case-Shiller is a lagging indicator.

The latest report is for June but that includes sales for April, May, and June.

Moreover, the sales reflects the date when the sales closed, not when the contracts were signed. April closing prices could include contracts signed as far back as February.

Percent Change Since January 2020 (Through June)

• Case-Shiller National: 51.8%
• Case-Shiller 10-City: 52.3%
• OER: 28.7%
• CPI Rent: 28.3%
• CPI: 24.7%

Home prices seriously disconnected from the CPI.

Many Millennials and Zoomers are angry at being priced out of homes rising more than double the alleged CPI.

The Decline Barely Registers

• From the peak, National is down 1.16 percent
• From the peak, 10-City is down 0.74 percent

In declining markets, prices are lower than the report indicates and in rising markets prices are higher than the report indicates.

Mess Entirely of Fed’s Making

This is a mess entirely of the Fed’s making. And it’s what happens when the Fed, and economists in general do not count home prices as inflation.

Home prices are not directly in the CPI or PCE. The latter is the Fed’s preferred measure of inflation.

Economists consider home prices a capital expense not a consumer expense. The problem is simple: Inflation is not just a consumer price concern!

The Fed ignored obvious inflation in the Great Recession and did so again in the Covid recession.

The Fed does not know what to do now because there is no good answer.

For homes to become affordable again. mortgage rates need to decline and home prices need to fall dramatically.

Related Posts

August 22, 2025: Powell Admits Prior Monetary Framework Was Hugely Flawed

The Fed just announced a new monetary framework. Is it any better?

August 22, 2025: Existing-Home Sales Rise 2 Percent to Nowhere, Expect Steep Price Declines

NAR-reported median prices will now decline for many months.

August 23, 2025: It’s Now Twice as Expensive to Buy an Entry-Level Home than Rent

Thinking of buying a starter home? Be careful!

More By This Author: