Question

Question 2:

2. The Standard and Poor's/Case Shiller Home Price Index is one of the leading indicators of housing trends in the United States. The base year for the index is January 2000. The following table lists index numbers for April 2014 and April 2015 for five cities. 1. In which of these five cities did housing prices increase the fastest from April 2014 to April 2015 in which did they increase the slowest? Briefly explain the basis for your answers 2. Can you determine from these numbers which city had the highesthouse prices in April of 2017 Briefly Explain City April 2014 April 2015 New York 1745 179.3 Miami 132 198.5 Phoenix 1504 Dallas 1363 148.5 San Francisco 192.5 211.5

Answer 1

a) From April 2014 to April 2015, the percentage increase in the prices of housing in each city =

New York = 2.75%

Miami = 8.35%

Phoenix = 3.44%

Dallas = 8.77%

San Francisco = 9.87%

The city in which the prices increased the fastest in this period is San Francisco where prices rose by 9.87% in this period.

The city in which the prices increased the slowest in this period is New York where prices rose by only 2.75% in this period.

b) No, it is not possible to determine from these numbers which city had the highest house prices in April 2015. This is because we only have the index values for the current year, which gives us the amount of increase in the prices in different cities when compared with the prices in the year 2000. These values do not compare the prices in different cities.