Most costly 9 American Cities

What drives costs in the most expensive cities in the U.S.? The answer is housing. But the nationwide trend of falling home prices won't knock the city with the highest cost of living, New York, out of the top spot anytime soon.

According to an index of 306 cities published by the Council for Community and Economic Research (C2ER), the cost of living in the borough of Manhattan in New York City is 128 percent higher than the national average, with an index score of 228.

The council has published the quarterly data since 1968, after it was originally published by the government, and uses the prices of 60 consumer goods and services in six categories: grocery items, housing, utilities, transportation, health care and miscellaneous items.

Housing, which is weighted the heaviest in the analysis, created challenges for the data collection with its plummeting prices across the country.

"This is the worst economy the project has seen since 1968," said Dean Frutiger, project manager of the Cost of Living Index project at C2ER.

Frutiger said the project usually does not use new home prices below $365,000 for its data collection, but he has been seeing "prices that are far below that."

"The economy forces us to be pretty flexible," he said.


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