A review of recent improvements to the CPI’s housing age-bias adjustment

The U.S. Bureau of Labor Statistics first introduced an age-bias adjustment with the release of the Consumer Price Index for January 1988. The purpose of the age-bias adjustment is to account for the physical depreciation of a housing unit over time. The method used to estimate age-bias adjustment factors has been modified several times over the years. In this article, I describe the most recent changes. Specifically, I explain the exclusion of units with extremely large rent changes. The U.S. Bureau of Labor Statistics added new variables to the model that include information on tenant turnover, whether the rent includes extra charges, and American Community Survey data on college enrollment and population density. In addition, I examine the effect of age-bias adjustments on the shelter indexes. This article presents in great detail the process used to estimate age-bias adjustment factors for the U.S. Bureau of Labor Statistics (BLS) Consumer Price Index (CPI).