Rental equivalence estimates of national and regional housing expenditures

The Personal Consumption Expenditures (PCE) series published by the Bureau of Economic Analysis (BEA) includes estimates of rent expenditures and owner-occupied housing expenditures for the benchmark year 2001. The main data sources are the Residential Financial Survey (RFS), carried out in conjunction with the decennial censuses dating back to 1960, and the biennial American Housing Survey. The RFS was discontinued after 2001. In addition to being a large component of the National Income and Product Accounts (NIPA), housing expenditures are estimated in several different branches of the Regional Income and Product divisions of BEA, including for state-level PCE, Gross Domestic Product (GDP) by state, and the Regional Price Parities (RPP) series. The latter uses a combination of microdata from the Bureau of Labor Statistics (BLS) data and the Census’ American Community Survey (ACS), both through special interagency agreements, and not available to the public. This paper applies the rental equivalence method that could potentially be used as the basis for both national and regional housing expenditure series. The estimates are based on publicly available data from the ACS, called Public Use Micro Sampling data or PUMS, and to a lesser degree from Zillow website data, but BEA could draw from the full ACS which totals over 3 million housing observations a year.