People usually graph nominal house prices, but it is also important to look at prices in real terms (inflation adjusted). As an example, if a house price was $200,000 in January 2000, the price would be almost $334,000 today adjusted for inflation (67% increase). That is why the second graph below is important – this shows “real” prices (adjusted for inflation). …

The second graph shows the same two indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.

In real terms, the National index is 16.0% above the bubble peak, and the Composite 20 index is 7.4% above the bubble peak in early 2006.In real terms, house prices are now above the previous peak levels. There is an upward slope to real house prices, and it has been over 16 years since the previous peak, but real prices appear historically high (Of course interest rates had been very low).