The Schiller Home Price Index

The Case Shiller Home Price Index and Its Affect on the U.S. Economy

Iris Jie Xu

George Westermeyer

Scott Holden

Joe Korytkowski

I. Overview of Case Shiller Home Price Indices

There are a number of benchmarks that investors, bankers, corporations and politicians use on a daily basis to measure the amount of success they want to achieve. The stock market uses the Dow Jones Industrial Average and other indices to measure how well stocks perform on a daily basis. The bond market uses LIBOR and 10-year Treasury bond yield-to-maturities as a point of reference for that group of securities. Similar to both the bond and stock market, the housing sector uses a set of indices called the Case Shiller Home Price Indices. This valuable set of surveys displays how well a geographic region is performing in terms of home sales, by measuring the average change in house prices in that area (Standard and Poor, 3). This set of indices can have both positive and negative effects on investors, home buyers, home sellers, financial institutions and the overall economy, based on its results. Therefore, the results of the Case Shiller Home Price Indices can be an important barometer as to how well the entire United States economy is performing.

Formed in the early 1980’s by economists Karl Case, Robert Shiller, and Alan Weiss, the Case Shiller Home Price Indices contain 23 total indexes (Standard and Poor, 2). The three primary indexes used however, are the National home price index, the 10 city home price index, and the 20 city home price index. The data for the 10 city and 20 city composites are released to the public on a monthly basis, while the National index releases its data every quarter (Fontinelle, 1). While there are differences between the three primary indices, they are similar in that each measures the average home prices for a geographic region. The National survey measures the average home prices of the nine United States...