Housing prices used to be factored into the CPI but were removed in 1983. The CPI is supposed to measure only consumption but housing is both consumption and an

Housing prices used to be factored into the CPI but were removed in 1983. The CPI is supposed to measure only consumption but housing is both consumption and an investment. It was replaced with owner equivalent rent which is represents just the consumption component of housing. In 1983 the Federal Reserve chairman at the time (Volker) also likely found the change convenient because it gave him more room to raise rates in the face of crushing asset deflation while reigning in inflation from the 70's.