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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 May but that includes sales for March, April and May. Moreover, the sales reflects the date when the sales closed, not when the contracts were signed. March closing prices could include contracts signed as far back as January.

Percent Change Since January 2020 (Through May)

• Case-Shiller National: 52.1%
• Case-Shiller 10-City: 52.4%
• OER: 44.9%
• CPI Rent: 28.0%
• CPI: 24.3%

CS National, Top 10 Metro Percent Change from Month Ago

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Prices are now down the third consecutive month.

The Decline Barely Registers

• From the peak, National is down 0.9 percent
• From the peak, 10-City is down 0.6 percent

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

Year-Over-Year Prices Still Up

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

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.

Existing-Home Sales Decline 2.7 Percent

On July 23, I reported Existing-Home Sales Decline 2.7 Percent, Median Price New Record High

Hooray, higher prices? That’s the message from the NAR.

That alleged Median Price Record did not happen. The NAR does a terrible job at seasonal adjustments (if it tries at all).

Click on above link for discussion. And expect rapid decline now in NAR median prices.

Most Completed Home For Sale Since the Great Recession

Also note Home Builders Have the Most Completed Home For Sale Since the Great Recession

You have to go back to July 2009 to find more completed homes for sale.

Factor in rising home inventories, lags, and a slowing economy. Home price pressures are hugely negative.

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