April 24, 2023


The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, more commonly known as the Case-Shiller Index, is a monthly economic indicator that tracks the price movement of single-family homes in the United States. The index is based on a pricing method pioneered in the 1980s by economists Karl Case and Robert Shiller called repeat-sales pricing.

Exactly What Case-Shiller Measures and What It Doesn’t

Each index tracks the price of single-family detached homes over time by comparing the asking and selling prices of the same home across a set number of surveys. New residences must be purchased and resold for their prices to be included in the Case-Shiller sample.

The Case-Shiller home price index only includes transactions where the buyer and seller were both looking out for themselves (known as “arms-length sales”), so the purchase price fairly represents the market value. Bank repossessions at the beginning of the foreclosure process and sales to relatives are not included. Transactions where the property type is changed (from a single-family home to a condominium), or transactions, where the price seems off (maybe due to a data error) are also excluded.

The sale of a property by a bank that has taken possession of it through foreclosure is considered an arms-length transaction and is therefore included in the indexes. Homes sold more than twice in six months are not included in the Case-Shiller indices because such activity has historically and statistically been indicative of either a non-arms-length transaction, an impending redevelopment, or fraud. None of the three primary Case-Shiller indices cover condos and co-ops. However, there are five large markets (Boston, Chicago, New York, Los Angeles, and San Francisco), each with a condo price index.

The Use of the Case-Shiller Index

The primary data unit of the Case-Shiller indices is the “sale pair,” which is the average of the prices at which the identical single-family home was sold in two separate, unrelated transactions. CoreLogic looks for a previous arms-length transaction for each residence in the most recent monthly sample of recorded transactions to compile such pairs.

Based on the lower of the two sale prices, a sale pair is classified as low, medium, or high. Using the same approach as the composite city indices, the Low-Tier, Medium-Tier, and High-Tier indices are calculated from these data sets.


Ten percent to fifteen percent of sales pairs with the highest price fluctuations and those with more time between the two transactions are given less weight by the index weighting process because they are more likely to reflect non-market variables.

Case-Shiller indexes for June, for example, represent transaction prices in April, May, and June, even though they are published at the end of August.

Reasons House Values Matter

The housing market is very sensitive to shifts in interest rates because it drives consumer spending on large purchases and creates jobs in the construction industry. Both home purchases and home price increases can be used as leading economic indicators. Are individuals comfortable making significant investments right now? How prosperous is a certain area, generally speaking? Analysts seeking answers to such issues can use the Case-Shiller Index for guidance.

Futures and options based on the Case-Shiller Index (a composite of ten city indices) and the individual city indices are traded on the Chicago Mercantile Exchange.

Businesses in the housing market can use these instruments to reduce the risk associated with the ebbs and flows of this cyclical sector. They also allow for forecasting the future of home values across the country and in the ten most important cities in the United States.

Options A and B Inflation of U.S. Home Prices

Indices of Home Costs (HPI)

The U.S. Federal Housing Finance Agency (FHFA) issues the quarterly House Price Index (HPI) per the Housing and Economic Recovery Act of 2008. The HPI includes statistics on repeat sales from as far back as 1975 and applies to 400 metro areas across the United States. The FHFA House Price Index (FHFA HPI) is another family of indexes similar to the Case-Shiller calculated by the FHFA using tens of millions of house sales records. To highlight different market segments, the FHFA creates three major indexes—the Purchase Only HPI, the All-Transactions HPI, and the Expanded-Data HPI.

The Purchase Only HPI receives the most media attention. The Expanded-Data HPI contains FHA mortgages and information from public records, expanding the data set to cover residences priced beyond the conforming loan limit for FHA mortgages. At the same time, the All Transactions HPI includes refinancings and purchases. The FHFA also creates supplementary indices for use in practice and study. Foreclosures and short sales are not factored into the Distress-Free HPI. More than 2,000 counties, 19,000 ZIP codes, and 50,000 census tracts are covered in detail by the Annual HPI.

Home Loan Index of Performance on Price

CoreLogic’s Loan Performance Home Price Index also relies on the repeat-sales pricing method. Over 1,300 counties and 930 CBSAs across the United States are included in CoreLogic’s Home Price Index (HPI).


Comparative Housing Costs Abroad

The United States is one of many countries compiling home price indices. The National Composite House Price Index is the most important in Canada and is calculated using the same repeat-sales formula. Vancouver, Calgary, Toronto, Ottawa, Montreal, and Halifax, home sales information is all combined. The Irish bank Permanent TSB Group Holdings publishes the House Price Index for Ireland. Permanent TSB controls roughly 18% of all mortgage loans in the country. This index uses a sophisticated method called multivariate linear regression analysis to assign a value to a property based on its size, kind, location, and other features.

Halifax, a subsidiary of Lloyd’s Banking Group and the largest mortgage lender in the U.K., provides its namesake index to the country’s housing market. Multivariate linear regression is utilized in the construction of this indicator as well.

In Conclusion

The Case-Shiller Index is a widely followed indicator of housing market conditions in the United States.


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