July 26, 2022 – Data updated through May 2022

The Case-Shiller Home Price Index is the most accurate way to look at house price appreciation in a city, between cities, and nationally.

The Case-Shiller Home Price Index measures house price inflation by looking at repeated sales of the same single-family houses.

The price of houses in January 2000 is given the value of 100. So a Case-Shiller value of 200 means house prices have doubled since January 2000. (More details here and here.)

Using an index of house prices instead of the actual dollar prices makes it easier to compare house price appreciation between the 20 cities.

The Data

Case-Shiller has data for 16 of the 20 largest metropolitan areas in the United States. Data isn’t available for, or Case-Shiller doesn’t follow, Houston (#5), Philadelphia (#8), Riverside (#13) or St. Louis (#20). The Case-Shiller graphics on this page show house price data for the rest of the top 20 metros plus Charlotte (#23), Portland (#25), Las Vegas (#28), Cleveland (#33), and the USA as a whole.

The Case-Shiller data is slow. It runs almost 2 months behind. For example, January data comes out at the end of March.

In addition, the data is a 3-month moving average so that January data that comes out at the end of March is really the average for November-January. Some might call it December data. Or you could call it a rolling quarterly index.

So you could say Case-Shiller data really runs 3 months behind. More discussion of the Case-Shiller data near the bottom of this page.

Base Year = 2000

Note. Not all cities have data all the way back to 1987. Phoenix and Minneapolis data start in 1989, Seattle starts in 1990, Atlanta and Detroit start in 1991, and Dallas data only starts in 2000.

Note: I applied the “Consumer Price Index for All Urban Consumers: All Items Less Shelter in U.S. City Average” (CPI-U Less Shelter) to the Case-Shiller Home Price Index.

Base Year = 1995

The Great Real Estate Bubble. The Case-Shiller graphs use 2000 as their baseline year but the housing boom started a bit earlier than that in most cities so you can miss the first chapters of the Great Real Estate Bubble story when you start in 2000.

The graphs below shift the base year back from 2000 to 1995 so you can see the whole bubble cycle develop from beginning to end.

A paper by Ferreira and Gyourko (2011) shows the real estate booms in some cities started in 1997-1999 and grew slowly for a while before taking off.

I wanted to see how the real estate booms developed from the very beginning so I moved the Case-Shiller baseline year back to 1995 from 2000.

The authors of that study consider a jump in prices as the beginning of a housing boom. That is, if prices have been increasing at around 3% a year for a few years and then they jump to 6% in one year, that jump is the beginning of the boom.

Note: Sorry but Case-Shiller doesn’t have data for Dallas before 2000 so I can’t shift the base year back to 1995 for Dallas.

Note: I applied the “Consumer Price Index for All Urban Consumers: All Items Less Shelter in U.S. City Average” (CPI-U Less Shelter) to the Case-Shiller Home Price Index.

Base Year = 1990

The S&L Real Estate Bubble. When I set the baseline back to 1990, it’s easy to see how the 1990 recession affected house prices. It took a lot of metros a lot of years to get back to 1990 prices.

If you move the date slider at the bottom of the graphs back to 1987, you can see that when the 1990 Recession started, the S&L real estate bubble peaked in California and DC. House prices in Boston and New York were falling before the 1990 Recession started.

The S&L bubble was centered on commercial real estate but it also affected residential house values in some metros. For more, check out this post, What The 1990s Tell Us About The Next Housing Bust.

For fun, be sure and check out Denver and Portland house prices during the 1990s.

Sorry but the Case-Shiller data for Atlanta, Detroit and Dallas doesn’t start until after 1990 so I can’t shift the base year back to 1990 for those 3 metros.

Earliest Case-Shiller Data
1987 = 14 metros
1989 = Phoenix & Minneapolis
1990 = Seattle
1991 = Atlanta & Detroit
2000 = Dallas

Note: I applied the “Consumer Price Index for All Urban Consumers: All Items Less Shelter in U.S. City Average” (CPI-U Less Shelter) to the Case-Shiller Home Price Index.

Adjusting Case-Shiller for Mortgage Interest Rates

See a full discussion of the Real Monthly Mortgage Payment House Price Index here.

The idea is that if you’re taking out a mortgage to buy a house, the price of the house is mainly your monthly mortgage payment and the mortgage interest rate has a big impact on your monthly mortgage payment. That is, your mortgage interest rate has a big effect on the price – the monthly mortgage payment price – of your house.

The problem with the graph above is that it assumes there were no down payments and it doesn’t account for taxes and insurance (and HOA fees, if any). They all dilute the impact of lower mortgage rates on monthly mortgage payments.

Down Payment. The larger the down payment, the smaller the monthly payments which means falling mortgage rates have a smaller impact on the monthly mortgage payment price of a house when down payments are larger.

Taxes and Insurance. Lower mortgage rates only lower your monthly principal and interest payments, they don’t lower your monthly taxes and insurance payments. I assume in the graphic below that in the typical U.S. mortgage, 75% of the monthly payment goes to pay principal and interest. In states with higher property taxes, the percentage of the monthly payment going to principal and interest would be smaller. Since there’s a smaller percentage of principal and interest in each monthly mortgage payment, when mortgage rates fall, the overall monthly mortgage payment falls less.

Real Mortgage Payment Price Index

Adjusting Case-Shiller for Income

Note. This section needs to be updated.

Adjusting house prices for income is a common way to look at how affordable house prices are. The idea is higher incomes make houses more affordable. If house prices go up 10% but people’s incomes also go up 10%, then houses are equally affordable. You often see this as a House-Price-to-Income Ratio.

Here we look at per capita personal income in the Case-Shiller metros. Unfortunately, data on metro-area per capita income are only available on an annual basis. The latest data is only through 2019 so we can’t monitor the current real estate market. We can, however, learn a lot about the relationship between house prices and income. (Data on personal income is available quarterly at the state-level. Perhaps in the future I’ll use that state-level quarterly data to estimate personal income at the metro-level for the most recent quarters.)

Biggest Problem with Case-Shiller

It’s not perfect but the Case-Shiller Home Price Index is a more accurate measure of house price changes than either average or median house price because the Case-Shiller Index looks at changes in the sales prices of individual houses over time.

However, the Case-Shiller Index has one big problem – it’s SLOW.

We won’t get the January numbers, for example, until the end of March and then the January numbers are really the November-January numbers because Case-Shiller uses a 3-month moving average. So what Case-Shiller calls “January” numbers should really be called “December” numbers because they represent November-January sales.

We usually get the average and median house price data soon after the end of a month which is an advantage over the Case-Shiller numbers. However, the average and median numbers jump around a lot from month to month which makes it harder to see changes in price trends.

In addition, average and median house prices are more affected by the mix of houses sold. When, for example, more luxury houses are sold for any reason (say, a strong stock market), the average and median house prices will increase even if the underlying house values haven’t changed a cent.

The S&P/Case-Shiller Index, however, is value-weighted, so more expensive houses have a greater influence on estimated price changes.

Despite running 3 months behind, the Case-Shiller Home Price Index remains the most accurate measure of house price appreciation.

3-Month Markers

Case-Shiller numbers are 3-month moving averages so the January number is really the November-January average. What Case-Shiller calls “January” numbers should really be called “December” numbers because they represent November-January sales. This chart shows that better.

Note on Adjusting for Inflation: In January 2021, I switched from using CPI-U as the inflation deflator to using “CPI-U Less Shelter”. Since Case-Shiller itself directly measures home price inflation, it’s better to use a deflator that doesn’t also incorporate housing price changes. Real home prices were a bit higher using “CPI-U Less Shelter” as the deflator. For example, using the year 2000 as the baseline, the inflation-adjusted Case Shiller Index for the USA in November, 2020 was 151 using CPI-U, and 159 using CPI-U Less Shelter.

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