Article

August 2013

Updating the rent sample for the CPI Housing Survey

In the final phase of the Consumer Price Index (CPI) initiative, the CPI Housing Survey is executing a process to continuously replace the CPI Housing Survey sample. This process begins with a 2-year augmentation of the 1990 U.S. Census Bureau sample, followed by a 4-year replacement of the 1990 sample, with both samples drawn from the 2000 Census. The process then culminates with a 6-year continuous replacement of the 2000 Census sample, with a sample drawn from the American Community Survey using 2010 Census geography. The CPI Housing Survey employed new innovative processing, including the use of purchased address lists and mail prescreening, while the existing core processing effectively compiled the new housing microdata throughout the sample augmentation and replacement.

On January 14, 2014, the following corrections were made to this article:

  • Fifth paragraph, first sentence: the number of in-scope units was corrected to 24,000
  • “New Housing Survey samples” section, second paragraph, third sentence: the first stage was corrected to indicate a 2-year sample augmentation

The Consumer Price Index (CPI) Housing Survey provides the data needed to measure price change for the two housing component indexes: Owners’ equivalent rent of primary residence (OER) and Rent of primary residence (Rent). These CPI components are the largest with 22.6 and 6.5 percent, respectively, of the CPI market basket as of December 2012. The Housing Survey follows the rents of a sample of renter-occupied housing units selected to represent both renter- and owner-occupied housing units in the urban United States. The CPI has 87 geographic pricing areas selected to represent the urban United States, and the Bureau of Labor Statistics (BLS) field staff agents based in those areas regularly collect data for the units of the Housing Survey sample.

Until 2002, the Shelter Index, another component of the CPI, was revised as part of a periodic roughly 10‑year cycle during which all dimensions of the CPI (expenditure patterns, items and stores, rented housing units, urban areas for collection, and computation and collection methods) were revised. The last comprehensive CPI revision occurred in 1998. Beginning in 2002, the BLS replaced these comprehensive periodic revisions and its associated large resource spikes with shorter, more continuous updating. For example, expenditure patterns are now updated every 2 years, items and the sample of outlets priced are updated over a 4-year period, and computer systems and collection methods are regularly maintained. The only dimensions that were not included in the new revision paradigm were the rented housing units used to measure shelter and the urban areas in which data are collected for the monthly CPI.

In 2010, the CPI began implementing a method for continuously updating the sample of rented housing units by replacing one-sixth of the rented housing unit sample every year on the basis of the latest available U.S. Census Bureau data. In addition to reducing the age of the sample, the new process more accurately reflects new construction and changes in where people live, reduces sample attrition, and more efficiently uses CPI field resources.

Since rents are not as volatile as most other consumer prices, collecting a large sample less frequently is more efficient for the Housing Survey. This efficiency is accomplished by assigning each selected neighborhood (called a segment) in a pricing area to one of six panels, each of which represents a subsample of each pricing area and provides sufficient information for the monthly OER and Rent indexes. Each month, a panel is priced, with all six panels being priced twice a year: panel 1 is collected in January and July, panel 2 in February and August, and so on. Every month, BLS field staff collects the rent and other information for one panel. The 6-month price ratio is computed (the current rent divided by the rent 6 months ago) for each unit in the panel. The measures of price change for the two housing components are based on weighted averages of these rent ratios.

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About the Author

Frank Ptacek
ptacek.frank@bls.gov

Frank Ptacek is a supervisory economist and Chief of the Office of Prices and Living Conditions, Housing section.