Construction Price US

Introduction
The Price Indexes of New Single-Family Houses Sold Including Value of Lot are a set of price indexes designed to illustrate inflation in new houses built for sale. These indexes do not include contractor-built houses, owner-built houses, or houses built for rent.

Data Collection
The data used to compute these indexes are obtained from the U.S. Census Bureau's Survey of Construction. This survey gathers information on the physical characteristics and prices of new single-family houses through monthly interviews with the builders or owners of a national sample of new houses.

Price Index Design – Laspeyres Type Indexes
The Constant Quality Price Indexes of New Single-Family Houses Sold Including Value of Lot are Laspeyres type indexes. The basic form of a Laspeyres type price index is:

∑
𝑖
(
𝑞
0
𝑖
⋅
𝑝
𝑡
𝑖
)
∑
𝑖
(
𝑞
0
𝑖
⋅
𝑝
0
𝑖
)
∑
i
​
(q
0i
​
⋅p
0i
​
)
∑
i
​
(q
0i
​
⋅p
ti
​
)
​

where
𝑝
0
𝑖
p
0i
​
and
𝑝
𝑡
𝑖
p
ti
​
are the prices in the base and current periods, respectively, and
𝑞
0
𝑖
q
0i
​
are the quantities in the base period. This ratio represents the current cost of the quantity of goods purchased in the base year compared to the cost in base year prices of the same quantity of goods. The denominator is the price of the average base period house. To compute this index, the prices must be derived from a regression model since only the total house and land price are collected.

Regression Model
Experience has shown that regression estimation of the price in the following multiplicative model is superior to estimation for the above additive model: