Federal Reserve Bank of St. Louis

05/30/2024 | News release | Distributed by Public on 05/30/2024 07:08

Home prices in the United States

The price of housing has been a major topic in the United States over the past decade, especially given the expansion of the housing market over the past 4 years.

In this FRED blog post, we want to measure how affordable homes have been for the typical earner, focusing on the house price itself but not factoring-in the cost of a mortgage. So, we compare the median weekly earnings for those 25 years and older with the S&P US national home price index, using the first quarter of 2020 as a point of reference.

Our graph shows that, since the first quarter of 2012, there's been a gradual increase in the house price index relative to wages. This is followed by a dip at the beginning of the pandemic and a rapid increase in the house price index relative to wages in the subsequent quarters. This is consistent with rising home prices throughout the pandemic.

After this peak in the price index relative to wages, in the second quarter of 2022, our index stagnates around the same values as the peak during the 2005-06 housing bubble. Will the index follow a path similar to the one from 2007 to 2012? Only the future will tell.

How this graph was created: In FRED, search for and select the series "S&P CoreLogic Case-Shiller U.S. National Home Price Index." From the "Edit Graph" panel in the top right corner, use the Edit Line 1 option to customize the data and add the series "Employed Full Time: Median Usual Weekly Nominal Earnings (Second Quartile): Wage and Salary Workers: 25 years and over." In the formula section, divide series a (price) with series b (earnings). Select the units to be an index and choose the reference date for the index to be 2020-01-01. Finally, change the start date to 2001-01-01.

Suggested by Alex Bick and Kevin Bloodworth.