Housing · Consumer Price Index
Owners' equivalent rent(OER)
The imputed rent a homeowner's house would command — the largest single weight in the CPI, and a price nobody actually pays.
Owners' equivalent rent is how the CPI handles the cost of living in a home you own. Because a house is partly an investment, the CPI does not track home prices or mortgage payments; instead it asks what an owner-occupied home would rent for, and prices that. OER is an imputation — an estimated price for a transaction that never takes place — derived from the observed market rents of comparable rental housing. No homeowner writes an OER check.
It matters because of its size: OER carries the largest weight of any single component in the CPI-U, roughly a quarter of the entire index. Because it follows market rents, and rents on existing leases reset slowly, OER moves with a long lag behind asking rents — which is why shelter so often dominates the headline inflation story on the way up and on the way down. It should never be read as what homeowners are paying; it is the rental value of what they own.
Also known as: OER, owners' equivalent rent of residences, imputed rent.
See owners' equivalent rent in the data
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Owners' equivalent rent — FAQ
What is owners' equivalent rent in inflation data?+
The imputed rent a homeowner's house would command — the largest single weight in the CPI, and a price nobody actually pays. Owners' equivalent rent is how the CPI handles the cost of living in a home you own. Because a house is partly an investment, the CPI does not track home prices or mortgage payments; instead it asks what an owner-occupied home would rent for, and prices that. OER is an imputation — an estimated price for a transaction that never takes place — derived from the observed market rents of comparable rental housing. No homeowner writes an OER check.
Why does owners' equivalent rent matter?+
It matters because of its size: OER carries the largest weight of any single component in the CPI-U, roughly a quarter of the entire index. Because it follows market rents, and rents on existing leases reset slowly, OER moves with a long lag behind asking rents — which is why shelter so often dominates the headline inflation story on the way up and on the way down. It should never be read as what homeowners are paying; it is the rental value of what they own.
Where does this inflation data come from?+
All figures come from the U.S. Bureau of Labor Statistics Consumer Price Index. pumsdata is an independent product and is not affiliated with the BLS.