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An Empirical Evaluation of the CPI Home Purchase Index, 1973–1978

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  • John S. Greenlees

Abstract

This paper examines the accuracy of the home purchase component of the Consumer Price Index. Alternative monthly index series are simulated over the period 1973–1978 using FHA Master Statistical File data. Hedonic indexes derived from monthly regressions are compared to series constructed by the current CPI index method, which utilizes only age and size of house in correcting for intertemporal quality change. Of particular interest is the BLS practice of “linking out” price changes occurring when FHA raises its ceiling on the size of insurable mortgages. This procedure may have led to a significant downward bias in the official index.

Suggested Citation

  • John S. Greenlees, 1982. "An Empirical Evaluation of the CPI Home Purchase Index, 1973–1978," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 10(1), pages 1-24, March.
    • Handle: RePEc:bla:reesec:v:10:y:1982:i:1:p:1-24
    DOI: 10.1111/1540-6229.00255
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    References listed on IDEAS

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    1. Gillingham, Robert, 1983. "Measuring the Cost of Shelter for Homeowners: Theoretical and Empirical Considerations," The Review of Economics and Statistics, MIT Press, vol. 65(2), pages 254-265, May.
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    Cited by:

    1. Randal Verbrugge, 2008. "The Puzzling Divergence Of Rents And User Costs, 1980–2004," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(4), pages 671-699, December.
    2. Davis, Morris A. & Heathcote, Jonathan, 2007. "The price and quantity of residential land in the United States," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2595-2620, November.
    3. John C. Weicher, 1987. "Mismeasuring Poverty and Progress," Cato Journal, Cato Journal, Cato Institute, vol. 6(3), pages 715-730, Winter.

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