Former Treasury Secretary and Harvard economist Lawrence Summers and his coauthors explore the relationship between the housing inflation measures from the Consumer Price Index (CPI) and Personal Consumption Expenditure Price (PCE) Index reports and private-market gauges of home prices.
“The way that housing inflation is measured — as the average price growth across all housing occupants, not as the average price increase one looking for housing today would pay relative to an earlier period — ensures that past developments in the housing market will result in an increase in recorded housing inflation in 2022,” they wrote.
Summers and his co-authors estimated that housing inflation would occur at a pace of roughly 6.5% to 7% in 2022, as measured by CPI and PCE. They came to this projection by comparing the past relationships between private-market measures of home prices and rents and movements in the government’s key inflation meters.
