August 2026 Real Home Prices: State the Deflator

August 2026 real home prices show an estimated 0.3% annual gain when Redfin’s reported price growth is adjusted using August all-items CPI-U. This compares home-price growth with broad consumer inflation, with a timing limit: Redfin covers three months of home sales, while the inflation adjustment compares August readings in each year.

What the September releases measure

Redfin published its August Home Price Index (RHPI) on September 22, 2026, reporting a 3.7% year-over-year increase and a 0.25% seasonally adjusted monthly increase. The observation window covers June, July and August, ending August 31. Its dated press release confirms those figures and the measurement period.

The RHPI follows repeat sales of single-family homes. Comparing the same properties reduces the influence of a changing mix of homes sold, distinguishing the index from a median sale price. First sales of newly built homes are excluded. Redfin’s methodology explains these coverage differences, which matter when choosing among home-price measures.

BLS published August data for the Consumer Price Index for All Urban Consumers (CPI-U) on September 11, 2026. The national all-items index increased 3.4% from August 2025, before seasonal adjustment. Table 1 supplies the underlying indexes, with 1982–84 equal to 100:

Source: BLS’s original August release.

Choose the deflator before interpreting real growth

Nominal growth measures the change in dollar prices. Real growth adjusts that change for the purchasing power of money. The deflator is the price index used to make that adjustment.

Here the deflator is CPI-U, U.S. city average, all items, not seasonally adjusted, comparing August 2026 with August 2025. This asks how home prices changed relative to a broad consumer basket, including food and energy. An annual-average CPI would answer a different timing question; BLS distinguishes annual averages from same-month annual changes.

Using CPI shelter would narrow the comparison to shelter services. It would not turn the calculation into an ownership-cost measure: BLS treats homes as investment goods and measures owner-occupied shelter through rental equivalence. Its housing factsheet explains that distinction.

Calculate August 2026 real home-price growth

Following the BLS constant-dollar approach, divide the nominal growth factor by the inflation factor:

Real growth = [(1 + nominal growth) ÷ (1 + inflation) − 1] × 100

Enter growth rates as decimals. Using the published RHPI increase and the CPI index levels:

[1.037 ÷ (334.980 ÷ 323.976) − 1] × 100 = approximately 0.29%

This is The Housing Current’s calculation, not an official Redfin or BLS real-price series. Report it as about 0.3% because the RHPI input is itself rounded.

Subtracting 3.4% from 3.7% produces a 0.3-percentage-point gap. That is a useful approximation. Division accounts for the changed purchasing power of every dollar by dividing the nominal-minus-inflation difference by one plus inflation, with both rates expressed as decimals. The discrepancy is small here; it becomes more consequential with larger rates.

Using both rounded headline rates gives about 0.290%; retaining the CPI index precision gives about 0.293%. Those extra decimal places explain the arithmetic without making the underlying estimate more certain.

The reporting windows do not fully align

Redfin’s monthly change compares overlapping rolling periods: June–August against May–July. Its annual comparison spans June–August 2026 against June–August 2025. Redfin’s methodology establishes that convention. August CPI instead compares August observations. Seasonal adjustment addresses recurring seasonal patterns; it does not make the observation windows identical.

The result is therefore an August-CPI-adjusted annual RHPI comparison, not a precisely synchronized measure of August-only transactions. Pairing the monthly RHPI change with one month of CPI would retain that mismatch.

A sensitivity check could average the June–August CPI index levels separately for each year, then divide those averages to obtain the inflation factor. It should average index levels, not annual inflation percentages. That would bring the calendar coverage closer without establishing identical observation weights. No such sensitivity estimate is included here.

Reproducing the calculation also requires the original releases. Redfin says late-arriving sales records can revise its estimates, so a later download can change the historical result. Retain the dated releases when comparing this estimate with other home-price data and reports.

National growth conceals local variation

Redfin’s August metro table reported annual nominal growth of 12.0% in San Francisco, compared with a 1.4% decline in Dallas.

Applying national CPI to either market would describe prices relative to the same national consumer basket, not local living-cost inflation. For negotiations, use the index as context alongside comparable properties, condition and contract terms. A national real-price calculation cannot establish the appropriate offer for an individual home.

What the result leaves out

This calculation does not deduct an owner’s mortgage interest, transaction costs, property taxes, insurance, maintenance or improvement spending. The CFPB’s ownership-cost guidance identifies expenses that a price-growth headline cannot resolve. A higher eventual sale price alone does not establish that renovation spending produced a profit.

A net investment-return analysis also needs financing and cash flows, including rental income where applicable. Real price growth describes the price change relative to the chosen inflation measure; it does not establish what the owner earned after those costs and cash flows.

A housing-affordability assessment needs income, available cash, loan terms and ongoing expenses. For a purchase decision, build that household and property-specific budget separately. The CFPB recommends assessing the full household budget, including costs beyond the mortgage payment.