How the Case-Shiller Home Price Index & the OFHEO HPI Differ

Though similar in methodology, the differences can make for divergence.

The OFHEO (Office of Federal Housing Enterprise Oversight) has published information about the differences in their methodology from that of the Case-Shiller® Home Price Index. Here are some of the points made:

Case-Shiller only uses purchase prices, while the All-Transaction OFHEO HPI also uses refinance appraisals.

Case-Shiller mortgage data comes from county records, while OFHEO uses conforming mortgage data from Fannie Mae and Freddie Mac.

Case-Shiller is value-weighted, giving more weight to higher priced homes, while OFHEO equally weights all prices.

Case-Shiller has no data from 13 states, while OFHEO covers all states; important when some areas are growing rapidly.

At times, one of these indexes can show a trend of increasing prices, while the other can show the opposite. So these differences should be carefully considered when you're deciding on information on which to make investment decisions.