There are two major home price indexes used by housing market analysts and others involved in the real estate markets. They are valuable to real estate investors who want to follow price trends nationally, regionally, and in some cases in local markets. In this article we’ll see how the S&P Case-Shiller home price index gathers and computes results. In the next article we’ll look at the FHFA, Federal Housing Finance Agency Index, which is similar in some ways, but very different in others. You may find that one of them is better for your needs, or you could use both.
The Case-Shiller index is the most widely followed, and is actually several indexes in one:
• National home price index: This covers nine major census divisions, calculated quarterly, and published on the last Tuesday of February, May, August, and November.
• 10-city composite index: Covers Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington, D.C.
• 20-city composite index: Includes all of the cities above, as well as Atlanta, Charlotte, Cleveland, Dallas, Detroit, Minneapolis, Phoenix, Portland OR, Seattle, and Tampa.
The city indexes are published on the last Tuesday of each month with a two-month lag. In other words, so a report released in April is for data through February. Here are the basic methodology factors in how the data is gathered and computed:
• Uses purchase prices of single family, detached residences.
• Data used comes from county real estate records.
• This is a value-weighted index, meaning that more weight is given to higher priced homes.
• Data covered is from 37 states.
• Compares the sale prices of the same property over time, not using new construction. So, once two different owners have purchased, the data is available to use.
• Transactions must be “arms-length.” In other words, the sales must not be foreclosures, rather homes sold at fair market value. A sale to a relative wouldn’t qualify.
• Also excluded are sales of properties after major changes, such as major renovation or additions.
The S&P Case-Shiller home price index is closely-watched by lenders, government and private analysts, as well as everyone in the real estate brokerage industry.
There are two major home price indexes used by housing market analysts and others involved in the real estate markets. They are valuable to real estate investors who want to follow price trends nationally, regionally, and in some cases in local markets. In this article we’ll see how the S&P Case-Shiller home price index gathers and computes results. In the next article we’ll look at the FHFA, Federal Housing Finance Agency Index, which is similar in some ways, but very different in others. You may find that one of them is better for your needs, or you could use both.
The Case-Shiller index is the most widely followed, and is actually several indexes in one:
• National home price index: This covers nine major census divisions, calculated quarterly, and published on the last Tuesday of February, May, August, and November.
• 10-city composite index: Covers Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington, D.C.
• 20-city composite index: Includes all of the cities above, as well as Atlanta, Charlotte, Cleveland, Dallas, Detroit, Minneapolis, Phoenix, Portland OR, Seattle, and Tampa.
The city indexes are published on the last Tuesday of each month with a two-month lag. In other words, so a report released in April is for data through February. Here are the basic methodology factors in how the data is gathered and computed:
• Uses purchase prices of single family, detached residences.
• Data used comes from county real estate records.
• This is a value-weighted index, meaning that more weight is given to higher priced homes.
• Data covered is from 37 states.
• Compares the sale prices of the same property over time, not using new construction. So, once two different owners have purchased, the data is available to use.
• Transactions must be “arms-length.” In other words, the sales must not be foreclosures, rather homes sold at fair market value. A sale to a relative wouldn’t qualify.
• Also excluded are sales of properties after major changes, such as major renovation or additions.
The S&P Case-Shiller home price index is closely-watched by lenders, government and private analysts, as well as everyone in the real estate brokerage industry.