S&P/Case-Shiller Home Price Indices: What it is, How it Works

What Are S&P CoreLogic Case-Shiller Home Price Indices?

The S&P CoreLogic Case-Shiller Home Price Indices are a group of indices that measure real estate or housing prices. They track changes in residential home prices throughout the United States. The group is made up of three different indices. They were developed in the 1980s by three economists and are now managed by Standard & Poor's (S&P). The data used is based on information from properties that have been purchased or sold at least twice. Results from the indices are published every month.

Understanding S&P CoreLogic Case-Shiller Home Price Indices

S&P CoreLogic Case-Shiller Home Price Indices are based on a constant level of data about single-family properties that have undergone at least two arm's length transactions. This means that the parties involved in these transactions have no pre-existing relationship with one another. Case-Shiller produces indices representing certain metropolitan statistical areas (MSAs) as well as a national index.

The Case-Shiller Index was developed in the 1980s by three economists: Allan Weiss, Karl Case, and Robert Shiller. The trio later formed a company to sell their research. It was purchased by Fiserv, which tabulates the data behind the index. The data is gathered by CoreLogic (an analytics and business intelligence company) and is distributed by S&P.

The group of indices consists of:

• S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index: The national home price index, which covers nine major census divisions is calculated on a monthly basis.
• S&P CoreLogic Case-Shiller 10-City Composite Home Price NSA Index: The 10-city composite index covers Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington, D.C.
• S&P CoreLogic Case-Shiller 20-City Composite Home Price NSA Index: The 20-city composite index includes all of the above cities plus Atlanta, Charlotte, Cleveland, Dallas, Detroit, Minneapolis, Phoenix, Portland (Oregon), Seattle, and Tampa.
• Twenty individual metro-area indices for each of the cities listed above.

The data produced for the indices is published on the last Tuesday of each month at 9 a.m. There is a two-month lag time in the data that is reported, so the report issued in May only covers home sales through March.

Special Considerations

The Case-Shiller Home Price Indices are used as the underlying pricing mechanism in Chicago Mercantile Exchange (CME) real estate futures and options. CME real estate futures and options trade on different indices, representing 10 different MSAs, and a composite index that represents 20 metropolitan statistical areas.

But the key to the reliability of the indices is what they represent. Put simply, the caveat is that the indices are perfect representations of the housing market. That's because they include only single-family dwellings in their calculations. Furthermore, because some of the metropolitan areas are so large (such as New York City or Los Angeles), having just one value may not accurately represent all areas within that city.