Clustered Housing Cycles

Ruben Hernandez-Murillo, Michael Owyang and Margarita Rubio

No 1524, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: Using a panel of U.S. city-level building permits data, we estimate a Markov-switching model of housing cycles that allows for idiosyncratic departures from a national housing cycle. These departures occur for clusters of cities that experience simultaneous housing contractions. We find that cities do not form housing regions in the traditional geographic sense. Instead, similarities in factors affecting the demand for housing (such as average winter temperature and the unemployment rate) appear to be more important determinants of cyclical comovements than similarities in factors affecting the supply for housing (such as housing density and the availability of developable land).

Keywords: clustered Markov switching; business cycles; building permits; comovements (search for similar items in EconPapers)
JEL-codes: C11 C32 E32 R31 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2015-10-22
New Economics Papers: this item is included in nep-mac and nep-ure
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Related works:
Journal Article: Clustered housing cycles (2017)
Working Paper: Clustered housing cycles (2013)
Working Paper: Clustered Housing Cycles (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedcwp:1524

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DOI: 10.26509/frbc-wp-201524

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