![]() The following questions, asked of consumers who rent their primary residence, are the basis of the weight for rent: “If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished and without utilities?”įor more information about the relationship between reported rents and OER, see Reconciling User Costs and Rental Equivalence: Evidence from the U.S. The expenditure weight in the CPI market basket for OER is based on the following question that the Consumer Expenditure Survey asks of consumers who own their primary residence: (1) Rental equivalence for vacation homes and timeshares exist as items in the Consumer Expenditure Survey (UCC 910105, 910106, and 910107) and have a small amount of weight in the CPI as Unsampled owners’ equivalent rent of secondary residences (ELI HC090), but as this item is unsampled, no price quotes are actually collected for it. Unsampled owners’ equivalent rent of secondary residences (1) ![]() Owners’ equivalent rent of primary residence The relative importance of an item is its percent of total consumer spending covered by the CPI market basket as of December of the most recent year. The Housing Survey collects price observations of rental housing units across the United States. The Consumer Expenditure (CE) Survey asks households the share of their budget which goes towards different categories of goods and services, and is subsequently used by the CPI program to create weights for index estimation. The data used as inputs in the construction of the index for shelter, as well as the indexes for rent and OER, are collected in two surveys. These non-consumption costs of owned housing are out of scope for the CPI under the cost-of-living framework that guides the index. Interest costs (such as mortgage interest), property taxes, real estate fees, most maintenance, and all improvement costs are part of the cost of the capital good and are also not treated as consumption items. Spending to purchase and improve houses and other housing units is treated as investment and not consumption in the CPI. Like most other nations' economic statistics programs, the CPI program views owned housing units as capital (or investment) goods distinct from the shelter service they provide, and therefore not as consumption goods. Owned housing units themselves are not priced in the CPI Housing Survey. ![]() For an owner-occupied unit, most of the cost of shelter is the implicit rent that owner occupants would have to pay if they were renting their homes, without furnishings or utilities. Most of the cost of shelter for renter-occupied housing is rent. The shelter service that a housing unit provides to its occupants is the relevant consumption item for the CPI. This factsheet focuses only on rent and OER, however. The CPI for shelter also includes lodging away from home and tenants’ and household insurance. All three of these series are published each month in each area for which CPI data are published. Owners’ equivalent rent of residences ( OER) and rent of primary residence ( rent) measure the majority of the change in the shelter cost consumers experience. The index for shelter, the service that a housing unit provides its occupants, is one of the largest parts of the CPI market basket-the goods and services that American households consume. Housing and consumption: the home-purchase connection Measuring Price Change in the CPI: Rent and Rental Equivalence ![]() Updating the rent sample for the CPI Housing Survey
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