DO HOUSE PRICE INDEXES BASED ON TRANSACTING UNITS REPRESENT THE ENTIRE STOCK - EVIDENCE FROM THE AMERICAN HOUSING SURVEY

There is an extensive literature employing a large number of different data sources focused on developing appropriate indices for measuring movements in house prices. We evaluate the strengths and weaknesses of the American Housing Survey (AHS) as a source of data on house prices . Taking advantage of its coverage of both transacting units and the e ntire stock, we assess how well price series constructed from transact ing units represent the entire stock. We use both the national and met ropolitan files of the American Housing Survey to estimate quality-con trolled hedonic house prices based on both transaction prices and owne r-reported values for the nation, census regions, and selected metropo litan areas. Furthermore, we link the two data panels of the AHS to ev aluate price movements from 1974-1991. Our results indicate that price series based on transaction prices and on owner-reported values have quite similar time-series patterns, although they can differ near mark et turning points. There are, however, clear differences between the t wo series in price levels. Owner estimates of value are consistently h igher than reported transaction prices. (C) 1995 Academic Press, Inc.