Justin Fox, Columnist

Have We Been Measuring Housing Inflation All Wrong?

Focusing on rents on new leases, as commercial indexes do, gives a better read on price pressures than existing government gauges like CPI.

November 21, 2022 at 11:30 AM UTC

By Justin Fox

Justin Fox is a Bloomberg Opinion columnist covering business, economics and other topics involving charts. A former editorial director of the Harvard Business Review, he is author of “The Myth of the Rational Market.”

New leases may offer a better window on inflation.
Photographer: Gabby Jones/Bloomberg

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The “unifying framework” that the US Bureau of Labor Statistics follows in designing the consumer price index, according to the agency’s handbook of methods, involves attempting to answer this question:

So, yes, it is a little weird that 24% of the latest CPI, the main US measure of inflation, consists not of market prices but of “the implicit rent that owner occupants would have to pay if they were renting their homes.”