The Case-Shiller Home Price Index: How to Handle It

Get Mortgage Loan Online in India | Mudra Credit Co-operative SocietyThe National Home Price Index is a monthly tracking tool for single-family home prices throughout the United States. The house price indices for each of the nine US census regions are added together to create the national index.

Data on home sales prices acquired from each metro region is used to compute the estimated total worth of single-family homes in that metro area. These totals determine the weight of each metro area in the composite indices for the top 10 and top 20 cities.

Every month on the final Tuesday at 9:00 a.m. Eastern Time (ET), all three indices are updated. Because of the two-month data lag, prices in April were reflected in the index statistics that were released at the end of June.

Is Case-Shiller Accurate in Predicting Specific Elements?

Based on the repeat-sales approach, which examines the prices at which a property was sold several times, each index calculates the rate of change in the price of single-family, detached houses. This is why prices for buying and reselling newly built houses are excluded from the case shiller index.

The Right Foundation

The foundation of Case-Shiller indexes is what’s known as “arms-length sale transactions.” The price paid for the item accurately represents its genuine market worth since both the vendor and the buyer were just thinking about their personal interests. The selling of a house to a relative or the first bank seizure of a house during a foreclosure are not covered by this. Sales that occur after the property’s categorisation has been altered (from single-family house to condominium, for instance) and sales with prices that seem to suggest an error in the data are also excluded.9. The sale of a foreclosed property by a bank is a neutral transaction that may be included in indexes since it benefits no party at the expense of any other.10.

Case-Shiller indexes do not include data from sales of the same property that occurred within a six-month period since such transactions have historically and statistically shown fraud, redevelopment, or unfair treatment in the transaction.

Stated differently, the Case-Shiller approach

The price at which a single-family house is sold in two unrelated transactions is known as the “sale pair,” which serves as the fundamental data unit for the Case-Shiller indexes. For each property in the most recent monthly sample of recorded transactions, CoreLogic searches for a similar sale. As a result, the company is now able to create these combinations.

Based on the initial selling price in the pair, a sale is classified as low, medium, or high in one of three price categories. The same methodology that was used to obtain the city composite indexes is applied to these data sets in order to calculate the Low-Tier, Medium-Tier, and High-Tier indexes.

The index weighting technique provides less weight to the 10% to 15% of sales pairings with the biggest price changes and to those with longer time intervals between transactions since they are more likely to reflect characteristics unrelated to the market.


Because it affects consumer spending on pricey items and generates jobs in the construction industry, the housing market is particularly susceptible to fluctuations in interest rates. The quantity and quality of sold homes serve as reliable gauges of the state of the economy.