U.S. National Home Price Index and the Consumer Price Index
Explore the U.S. National Home Price Index and Consumer Price Index, crucial economic measures that shed light on housing market trends and cost of living changes.
The United States National Home Price Index and the Consumer Price Index are two separate, yet essential, indicators that provide a comprehensive understanding of the economy.
The National Home Price Index in the United States is a valuable resource that tracks the progression of housing market trends across the nation. It specifically monitors fluctuations in single-family home prices over time. This index is generated by the Federal Housing Finance Agency (FHFA), an independent regulatory body responsible for overseeing Fannie Mae and Freddie Mac. The U.S. National Home Price Index is a crucial instrument for homebuyers, sellers, and investors to stay informed about the housing market landscape.
In contrast, the Consumer Price Index (CPI) evaluates the average shift in the prices of goods and services over time. It acts as an inflation indicator and represents adjustments in the cost of living for consumers. The Bureau of Labor Statistics (BLS) calculates the CPI based on a selection of goods and services typically acquired by households. As one of the most prevalent measures of inflation, the CPI is routinely scrutinized by policymakers, economists, and investors.
Although both the U.S. National Home Price Index and the Consumer Price Index are significant metrics, they each examine different aspects of the economy. The National Home Price Index offers insights into the housing market, while the Consumer Price Index reveals fluctuations in the cost of living.
By dividing the U.S. National Home Price Index by the Consumer Price Index, an inflation-adjusted home price index, or real home price index, can be derived. This index showcases changes in home prices that have been adjusted for alterations in the economy's general price level, as determined by the CPI.
Calculating the real, inflation-adjusted change in home prices over time becomes possible by dividing the U.S. National Home Price Index by the Consumer Price Index. This process helps to distinguish whether shifts in home prices result from genuine changes in asset value or are merely a reflection of modifications in the economy's overall price level.
