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Inflation Adjusted House Prices Declined in June


by Calculated Risk on 8/31/2022 11:13:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Inflation Adjusted House Prices Declined in June


It has been over 16 years since the bubble peak. In the Case-Shiller release yesterday, the seasonally adjusted National Index (SA), was reported as being 66% above the bubble peak in 2006. However, in real terms, the National index (SA) is about 16% above the bubble peak (and historically there has been an upward slope to real house prices). The composite 20, in real terms, is about 7% above the bubble peak.

People usually graph nominal house prices, but it is also important to look at prices in real terms (inflation adjusted). As an example, if a house price was $200,000 in January 2000, the price would be almost $339,000 today adjusted for inflation (69.5% increase). That is why the second graph below is important – this shows “real” prices (adjusted for inflation). …

The second graph shows the same two indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices. In real terms, the National index is 14.6% above the bubble peak, and the Composite 20 index is 6.1% above the bubble peak in early 2006.

Note that real prices declined in June, with nominal prices increasing less than inflation.

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