Haus launches a new house price index - Capital Economics
US Housing

Haus launches a new house price index

US Housing Market Update
Written by Sam Hall
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As it is based on asking prices, the recently launched Common Haus Price Index (CHPI) could lead other house price indices by 1-2 months, which would make it a useful tool for forecasting short-term changes in house prices. While its track record is far from perfect, and it exhibits significantly more volatility, the recent levelling off in CHPI annual growth supports our view that house price growth will top out in the coming months.

  • As it is based on asking prices, the recently launched Common Haus Price Index (CHPI) could lead other house price indices by 1-2 months, which would make it a useful tool for forecasting short-term changes in house prices. While its track record is far from perfect, and it exhibits significantly more volatility, the recent levelling off in CHPI annual growth supports our view that house price growth will top out in the coming months.
  • The CHPI differs from the other house price indices we track in a couple of ways. First, to account for changes in the type of home on the market, it is constructed using a hedonic regression model. This approach assumes that houses are priced according to a combination of housing-specific characteristics, as well as factors reflecting the surrounding area. Haus uses this approach to estimate the average asking price for the most common American home on a weekly basis.
  • In contrast, Case-Shiller and FHFA use a ‘repeat sales’ methodology to construct their indices. But perhaps the more important difference is that the CHPI tracks asking prices instead of sales prices. As a result, Haus claims that the CHPI leads other house price indices by 1-2 months, which would make it a useful tool for predicting short-term changes in house prices.
  • However, the relationship between the CHPI and other house price indices is far from perfect. (See Chart 1.) The CHPI is also a lot more volatile, which probably reflects its use of asking prices. We have adjusted the vertical axes in Chart 1 accordingly. The effectiveness of the CHPI as a leading indicator for other house price indices therefore appears limited. Indeed, a surge in house price growth in late 2016 on the CHPI was not reflected in the Case-Shiller or FHFA indices. And, if anything, the CHPI appeared to lag the headline indices in 2013 and 2014.
  • That said, it did lead the recent boom in prices, and it may still be helpful in predicting movements in monthly indices given that it is released on a weekly basis. The recent levelling off in CHPI annual growth therefore provides some support to our view that house price growth will top out in the coming months.
  • Haus also constructs an inventory indicator, but the historical data for this metric only go back to 2017, which makes it difficult to gauge whether it will prove a useful leading indicator for the total number of homes for sale. Indeed, the two series have been diverging since mid-2020. (See Chart 2.) That said, the recent decline in the Haus inventory indicator is consistent with our view that the number of homes for sale will remain close to record lows. In turn, that provides support to our call that home sales will fall back to their pre-COVID trend over the next few months.

Chart 1: House Prices (% y/y)

Chart 2: Haus Inventory & Homes for Sale (% y/y)

Sources: Haus, Case-Shiller, FHFA

Sources: Haus, NAR, Census Bureau, Capital Economics


Sam Hall, Assistant Property Economist, sam.hall@capitaleconomics.com