Using nominal rates, data show home prices have shot up 73% since 2006. But that's not the whole story
July 2, 2024
Image: photobuay / stock.adobe.com
Home prices have increased by more than 10% when adjusted for inflation.
It's no secret that home prices have soared during the past few years, so much so that, according to the April 2024 Case-Shiller house price index released on June 25, the seasonally adjusted National Index (SA) was reported as being 73% above the housing-bubble peak we saw in 2006. However, insight from the Calculated Risk blog points out the importance of looking at house prices in "real terms," that is, their relative price over time. Do that, and you'll find that home prices, adjusted for inflation, are just over 10% above 2006 prices. This means, adjusted for inflation, home prices are 2.3% below the recent peak in 2022.
People usually graph nominal house prices, but it is also important to look at prices in real terms. As an example, if a house price was $300,000 in January 2010, the price would be $432,000 today adjusted for inflation (44% increase).
