As CR pointed out yesterday, there are now several home pricing indicies.
The one developed by FNC attempts to overcome the problems with the repeat-sale measurements – here is their explanation:
One possible approach to address this dilemma is to consistently use all of the housing stock for each period. To do this it is necessary to have a market price for each house in each period.
Since all the properties do not sell, a model must be created to price all of the major attributes of a house (i.e. location, gross living area, age, lot size, bedrooms, bathrooms, etc.) and then compute an estimated market price for each property. The value of each of the attributes is estimated based on the observed properties that do sell over an extended window.
This approach allows all of the properties to be included in the index which then provides a stable broad based index for each period. Models of this type are referred to as hedonic models and have been used for many decades to estimate the value of a property. The limitation to using this approach for an index has been the general lack of availability of characteristic information about residential properties.
FNC has developed a hedonic index based on the data collected from public records and blended with data from appraisals. The addition of the appraisal data provides the physical property characteristic data that is often missing from public records.
Here is their San Diego Residential Price Index, which has a familar shape to it: