I just updated the Case-Shiller charts.

“’Home prices continue to climb at a 4% to 5% annual rate across the country,’” says David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Dow Jones Indices.”

Of course, the variation between cities is tremendous. San Francisco and Denver home values, for example, are both up 10.7% from a year earlier.

San Francisco, however, lost most of its upward price momentum which is typical for the time of year. Denver, on the other hand, still had a lot of upward momentum despite the time of year.

New York, Chicago and Washington D.C. had the least amount of appreciation August-to-August (less than 2% appreciation) among the 20 metro areas covered by the Case-Shiller Home Price Index.

The Case-Shiller data is now updated through August. You can see my updated Case-Shiller charts here.

2013 Was Almost As Hot As 2005-2006

Here’s a scary little factoid in their press release.

“After removing the effect of inflation, prices rose almost as quickly in 2013 as they did in 2005-2006, the peak of the boom.”

Case-Shiller National Home Price Index

I knew 2012 and 2013 were hot but that’s kind of scary hot.

Home Prices Are Not Directly Included in CPI

The Consumer Price Index (CPI) does NOT incorporate home prices directly. The CPI uses the estimated “rental equivalent” to estimate changes in housing prices. Rents, however, are far more stable than home prices as the graph below shows.

That means homeowners who buy during a rapidly rising real estate market face a lot of housing cost “inflation” that isn’t incorporated into the CPI inflation rate. That means the Consumer Price Index underestimates inflation during times of rapidly rising home prices.

I bet recent home buyers in San Francisco and Denver would agree.

Here’s a chart I found on the web that shows the relationship well.

House price vs rent

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