A panel of interarea price indices for all areas in the United States 1982–2012

Abstract

This paper describes the production of a panel of price indices for housing services, other produced goods and services, and all produced goods and services for each metropolitan area in the United States and the non-metropolitan part of each state for each year from 1982 through 2012. Our general approach is to first produce interarea price indices for a single year 2000 and then use BLS time-series price indices to create the panel. Our geographic housing price index for 2000 is based on a large data set with detailed information about the characteristics of rented dwelling units and their neighborhoods throughout the United States that enables us to overcome many shortcomings of existing interarea housing price indices. For most areas, our price index for all goods other than housing is calculated from the price indices for categories of nonhousing goods produced each quarter by the Council for Community and Economic Research, formerly the American Chambers of Commerce Researchers Association. In order to produce a nonhousing price index for areas of the United States not covered by their index, we estimate a theoretically-based regression model explaining differences in the composite price index for nonhousing goods for areas where it is available and use it to predict a price index for these goods for the uncovered areas. The overall consumer price index for all areas is based on the preceding estimates of the price of housing and other goods. Electronic versions of the price indices are available online. The paper and its online appendices report many sensitivity analyses, and the paper compares the new housing price index with the most widely used indices of differences in the rents of identical units across areas.