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.
Data: U.S. Bureau of Labor Statistics, Consumer Price Index (CPI-U). pumsdata is not affiliated with BLS.
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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 for All Urban Consumers (CPI-U) — verbatim monthly index values from 1997 to the present for the U.S. city average, census regions, and about two dozen metro areas, with percent changes derived from the indexes. pumsdata is an independent product that makes the data easy to chart and compare, and is not affiliated with or endorsed by BLS.