The Price of Housing in the United States, 1890-2006

We construct the first consistent market rent and home sales price series for American cities across the 20th century using millions of newspaper real estate listings. Our findings revise several stylized facts about U.S. housing markets. Real market rents did not fall during the 20th century for most cities. Instead, real rental price levels increased by about 20% from 1890 to 2006. There was also greater growth in real housing sales prices from 1965 to 1995 than is commonly understood. Using these series we document several new facts about housing markets. The return to homeownership has varied considerably across cities and over time, but rental returns were historically much more important than capital gains in every city. We discuss the implications of our indices for the business cycle and the consumer price index. Finally, we provide evidence that housing prices increased unevenly across cities over time in response to natural building and regulatory constraints.