Rental Prices and the Cost of Living in the United States, 1914‐2006

Ronan Lyons (), Allison Shertzer () and Rowena Gray ()
Additional contact information
Ronan Lyons: Department of Economics, Trinity College Dublin
Allison Shertzer: Federal Reserve Bank of Philadelphia
Rowena Gray: UC Merced

No tep0526, Economic Papers from Trinity College Dublin, Economics Department

Abstract: The Rent of Primary Residence (RoPR) series constructed by the Bureau of Labor Statistics (BLS) implies that nominal rental prices increased by just 2.6% per year from 1914 to 2006 while overall prices grew by 3.3%. We show that this 'falling real rents' puzzle can be explained by the evolving treatment of shelter in the Consumer Price Index (CPI). In this paper we construct a new, methodologically consistent shelter price series using the Historical Housing Prices (HHP) Project rental index. We also construct a revised set of shelter weights going back to 1914 and combine them with the price series to create an alternate CPI that applies the owners' equivalent rent (OER) concept of shelter consistently across time. The HHP shelter price series increases by a factor of 28.4 (compared with the 10.7 increase in RoPR) and lifts average CPI growth from 3.3% to 3.6% per year. The revised series eliminates the long‐run decline in real rents in the CPI and provides a new benchmark for assessing trends in the cost of living and real income in the U.S. over the twentieth century.

Keywords: Housing prices; rental indices; CPI; housing markets; cost of living (search for similar items in EconPapers)
JEL-codes: E31 R3 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2026-03
New Economics Papers: this item is included in nep-hre and nep-uep
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.tcd.ie/Economics/TEP/2026/TEP0526.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tcd:tcduee:tep0526

Access Statistics for this paper

More papers in Economic Papers from Trinity College Dublin, Economics Department Contact information at EDIRC.
Bibliographic data for series maintained by Colette Angelov ().