Monthly changes in the value of single-family houses in the United States are tracked by the Case-Shiller Index, sometimes known as the CoreLogic case shiller index. CoreLogic Case-Shiller U.S. NHP NSA Index is its full name. The repeat-sales pricing technique was developed in the 1980s by economic theorists Karl Case and Robert Shiller. This comprehensive guide will help you understand the index’s goals, methods, and the data it may provide on the U.S. housing market.
A Primer on the Case-Shiller Home Price Index
The index is often used as a barometer of U.S. home prices. It tracks nationwide changes in the value of detached single-family homes. The three main components of the index are:
National House Price Index
These indexes are calculated using data on repeat sales of single-family homes from local registers of deeds and other real estate transaction recording authorities. Distribution of indices is handled by S&P Dow Jones Indices, a division of S&P Global Inc.
The Theory and Practise Behind It Insights into the Case-Shiller Index
The index, which measures market movement in the value of single-family detached homes, is computed using the repeat-sales method. This strategy revolves on contrasting the costs associated with buying and selling the same piece of property many times. This index allows for adjustments to the quality of the sold homes, in contrast to average-based indices.
Please bear in mind that the following are not factors that the Case-Shiller indexes track:
New construction dwellings not yet available for resale
Properties may be sold to family members or repossessed by banks at the beginning of the foreclosure process.
A property’s classification (from, say, a single-family home to a condominium) may be altered when a certain number of transactions have taken place.
Synergies in Marketing and Data Gathering
Case-Shiller indexes use the “sale pair” as their basic data element. This is a reference to two impartial transactions involving the same single-family home. The company tries to find a comparable sale for every property in the most recent monthly sample of recorded sales. Because of this, the firm may now construct such combinations.
Each sale pair is assigned to one of three price bands based on the first item’s selling price. These bands are low, medium, and high. Low-Tier, Medium-Tier, and High-Tier indexes were constructed using these data sets in the same way as city composite indexes were.
By using an index weighting method, the 10–15 percent of sales pairings with the largest price fluctuations and the most time elapsed between them are given less weight in the overall analysis. This is due to the increased likelihood that these sets of transactions indicate factors unrelated to the market.
Each monthly index is calculated by averaging the data over the preceding three months’ worth of trades. For instance, the Case-Shiller indexes for June, which were issued at the end of August, represent the transaction prices in April, May, and June.
What It Tracks and Doesn’t Track: The Case-Shiller Index
Even though single-family homes are the primary focus of the Case-Shiller indexes, condo prices in five major areas (Chicago, Boston, Los Angeles, and New York City) are also tracked by a separate set of indexes (San Francisco is left out of these condo indexes).