What are S&P CoreLogic Case-Shiller Home Price Indices?
The S&P CoreLogic Case-Shiller Home Price Index is another leading measure of US residential real estate prices.
The group of indices consists of different products that each track changes in the value of properties in certain areas.
Key Takeaways
- They are a series of indices that track changes in the value of residential real estate in the United States.
- The house price indices were first developed by economists Karl Case and Robert Shiller through their firm, Case Shiller Weiss, Inc.
- These indices don’t include sample sale prices associated with new construction, condominiums, co-ops/apartments, or multi-family dwellings.
- Most countries will have their own house price indices that monitor price movements and can make predictions.
- First-time buyers, existing homeowners, economists, analysts and fund managers will all be interested in house price movements.
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History of Case-Shiller Home Price Index
The indices were first developed by economists Karl Case and Robert Shiller through their firm, Case Shiller Weiss, Inc. They were developed between 1991 and 2002 by this business, under the direction of Allan Weiss, to give an insight into US property valuations.
They are now produced by CoreLogic, which provides real estate insights that are used by anyone interested in the real estate market.
Understanding the Case-Shiller Home Price Index
The indices aim to measure changes in the total value of all existing single-family housing stock in the US.
Here we will take a look at what the indices track, how they’re calculated, and some of the limitations that are worth bearing in mind.
What Does Case-Shiller Home Price Index Track?
The S&P CoreLogic Case-Shiller Home Price Indices measure the price of existing single-family homes in the US.
There are different indices covering specific areas.
For example, the S&P CoreLogic Case-Shiller US National Home Price Index measures the value of single-family housing within the US. The index is a composite of single-family home price indices for the nine U.S. Census divisions and is calculated monthly.
Meanwhile, the S&P CoreLogic Case-Shiller city indices reflect the average change in home prices within particular geographic areas.
These indices, which are calculated monthly, cover 20 metropolitan areas. They’re aggregated to form two composites: one comprising 10 metro areas and the other including all 20.
They are known as the S&P CoreLogic Case-Shiller 10-City Composite Home Price Index and the S&P CoreLogic Case-Shiller 20-City Composite Home Price Index.
How is the Case-Shiller Index Calculated?
The monthly S&P CoreLogic Case-Shiller Home Price Indices use the so-called ‘repeat sales method’ of calculation.
This uses data on properties that have been sold at least twice. This is seen as essential in order to capture the “true appreciated value” of each property being sold, according to S&P.
For example, the S&P CoreLogic Case-Shiller US National Home Price Index aggregates nine US Census division repeat sales indices using reference points and estimated values.
The indices are calculated monthly using a three-month moving average algorithm. Data is collected on all transactions of all residential properties in those periods.
Example of the Index
House prices are still rising but at a slower rate, according to the most recent indices published in late September 2024.
The S&P CoreLogic Case-Shiller US National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.0% annual gain for July, down from 5.5% in the previous month.
The 10-City Composite saw an annual increase of 6.8%, which was slightly lower than the previous month’s 7.4% uplift.
The 20-City Composite, meanwhile, enjoyed a 5.9% year-over-year increase of 5.9%. Once again, this was down on the 6.5% increase of the prior month.
The chart below shows the annual returns of the US National, 10-City Composite, and 20-City Composite indices.
Foreign Housing Price Indices
Most countries around the world have indices that illustrate the strength (or otherwise) of the home real estate market. As well as being useful for homeowners and would-be buyers, the health of the property market can provide a useful insight into the financial stability and optimism of a country.
For example, there are several indices covering movements in the domestic real estate market within the UK.
Two of the most popular are published by the Nationwide and Halfax building societies, both of which provide terrific detail.
You can even access a house price calculator that enables you to estimate the value of the property in question.
Limitations of the Case-Shiller Indices
Of course, no index is 100% perfect. There will be limitations regardless of the approach being taken and this family of indices is no different.
For example, it doesn’t include sample sale prices associated with new construction, condominiums, co-ops/apartments, and multi-family dwellings.
It’s also worth bearing in mind that the factors affecting residential property, such as demand, supply and value, may differ between areas.
S&P explained: “Consequently, the price dynamics of different property types within the same market often vary, especially during periods of increased market volatility.”
The Bottom Line
Anyone trying to establish the definition of these indices will quickly appreciate how important it is to monitor movements in real estate prices. There are many interested groups.
For example, first time buyers will want to gauge whether now is a sensible time to get their foot on the property ladder. Similarly, homeowners looking to sell will factor into their decision-making process whether prices are rising or falling.
However, it’s not just those looking to buy bricks & mortar that will monitor the monthly valuation movements. Analysts, fund managers and economists will all look at the data.
This is because movements in property prices are seen as an important economic indicator into the financial health of a country and its population.
FAQs
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References
- Online Data – Robert Shiller (Econ.yale)
- S&P CoreLogic Case-Shiller Home Price Indices – Indices | S&P Dow Jones Indices (SP Global)
- S&P CoreLogic Case-Shiller Home Price Indices Methodology (SP Global)
- S&P Corelogic Case-Shiller Index All-Time Highs Continue in July 2024 – Index Announcements | S&P Dow Jones Indices (SP Global)
- House price index | Nationwide (Nationwide.co)
- Halifax – Internet Banking – Error (Halifax.co)
- United States S&P Case-Shiller Home Price Index (Trading Economics)