Houses are not consumer goods, they are assets, like stocks on the stock market. If the stock market goes up 2%, we do not make a habit of saying "Terrible news

Houses are not consumer goods, they are assets, like stocks on the stock market. If the stock market goes up 2%, we do not make a habit of saying "Terrible news today, the stock market suffered 2% inflation." This sentence is unmanageable: "You're conflating appreciation and depreciation (rise or fall in real value) with inflation/deflation (rise or fall of nominal value)." First of all, I'm explaining the government's definition of consumer inflation, which you seem to misunderstand. The government does not formally model rising asset prices as consumer inflation, the government models that increasing wealth. Second of all, you're conflating nominal appreciation and nominal depreciation with the concept of the "real," which is to say, inflation adjusted value. If the value of your house increases by 5% then you are 5% wealthier. Whether this has kept up with the pace of inflation is a separate issue. We need to talk cleanly and cogently about nominal value versus real changes in value. You can do that by adjusting your changing value of wealth by the consumer inflation, but clearly you cannot do that mental adjustment if you're trying to base the calculation off the real value of your assets -- in that case you would be double counting the inflation. To put that differently: Suppose your house increases a nominal 5% and consumer inflation is 6%. You might say "Oh, I'm 1% poorer in real terms." But you can't say that if, as you seem to want, asset values are included in the calculation of consumer inflation. In other words, if the 5% increase is already part of the 6% increase, then you've mushed the concepts together to such an extent that the calculation becomes meaningless.