The Repeat Rent Index∗

Studies of real estate markets have long been hamstrung by the lack of reliable information on the flow price of housing. In contrast to the voluminous information on constant-quality real estate sale prices (from e.g. the Federal Housing Finance Administration) comparable indices for rents have not been available. The only widely available data comes from the Bureau of Labor Statistics (BLS), who compile survey data and construct rental indexes for the nation, the census regions, but only for 11 metropolitan areas. This research rectifies that data lacuna in three ways. First, we eschew surveys of existing renters in favor of using only newlysigned lease contracts. Second, we employ a weighted repeat rent estimator, that replicates for the rental market, as closely as possible, the weighted repeat sales estimator of Calhoun (1996), following Case and Shiller (1989) and Bailey, Muth, and Nourse (1962). Third, we are able to construct indexes for a larger number of cities than are available for the BLS thus expanding the professions ability to make cross-sectional comparisons of housing markets, particularly in conjunction with FHA data. Our general conclusions are that (a) there is considerable heterogeneity in the behavior of rents across cities over the 2000-2010 decade, but the number of cities and years for which nominal rents fell is substantial; (b) rents fell more, or rose more slowly, over the decade than would be inferred from the BLS data. In particular we find that rents fell in many cities following the onset of the housing crisis in 2007. This is not usually observed in the BLS; (c) repeat rent indexes (RRI) are more volatile than the BLS indexes; (d) the BLS lags the repeat rent index by 2-4 quarters. The last two conclusions follow directly from the differences in sampling methods and index construction.