How Is the Housing Market Measured? The Case-Shiller Index, Explained
The Case-Shiller index, considered the most authoritative measure of the housing market, is comprised of several indexes.
Dec. 1 2021, Published 4:16 a.m. ET
The housing market is cooling down a little. Recent data from the S&P CoreLogic Case-Shiller index shows that Sept. 2021 was the first month since May 2020 when home prices didn't increase as much as they had in the past.
What is the Case-Shiller index?
The Case-Shiller index is considered the most authoritative measure of the U.S. housing market. The index, which is actually comprised of several indexes, provides home sales data on the last Tuesday of every month. That data looks at home prices and sales two months prior to the current month. For example, the Case-Shiller index information published Tuesday, Nov. 30, looks at home prices from Sept. 2021.
The Case-Shiller index is made up of these indexes:
The national home price index, which tracks home values in nine major census divisions.
The 10-city composite index, which covers home sales in Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington, D.C.
The 20-city composite index, which looks at the cities in the 10-city composite plus Atlanta, Charlotte, Cleveland, Dallas, Detroit, Minneapolis, Phoenix, Portland (Oregon), Seattle, and Tampa.
20 individual metro area indexes for cities included in the 10-city and 20-city indexes.
The indexes give an indication of the health of the housing market based on “repeat sales” transactions of single-family properties. Repeat sales are those homes that have sold twice or more. The sales of new homes are not included in the index data.
The Case-Shiller index also excludes condos, homes transferred to family members, properties that have had or will have their designation changed, and transactions with data errors.
Who invented the Case-Shiller index?
The index was first developed in the 1980s when Wellesley College economics professor Karl Case studied home pricing trends by comparing repeat sales on the same home. He began by looking at data from home sales in Boston, which was experiencing a housing boom at the time.
Case joined forces with Yale economics professor Robert Shiller and, together, the duo created the national home price index. They were eventually joined by Allen Weiss, one of Shiller’s graduate students. Weiss encouraged the two other economists to form the company Case Shiller Weiss and sell their data to markets.
Case Shiller Weiss was sold in 2002 to Fiserv, the information management company that tabulates data for Standard & Poor’s. CoreLogic bought the business from Fiserv in April 2013.
What does the latest Case-Shiller index say about home prices?
The latest data from the Case-Shiller index shows that home prices in Sept. 2021 were 19.5 percent higher than last year's. Although that's still high, it's down from 19.8 percent in Aug. 2021. It's the first decrease since prices started rising in May 2020 amid the COVID-19 pandemic.
The 10-city composite index rose 17.8 percent, compared with 18.6 percent in Aug. 2021. The 20-city composite was 19.1 percent higher than last year's and stood at 19.6 percent in Aug. 2021.
The largest home price increases were in Phoenix, Tampa, and Miami, while the smallest price gains were in Chicago, Minneapolis, and Washington, D.C.