The Ins and Outs of Selling Houses: Understanding Housing-Market Volatility

L. Rachel Ngai and Kevin D. Sheedy ()
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Kevin D. Sheedy: London School of Economics

No 16603, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The housing market is subject to search frictions in buying and selling houses. This paper documents the role of inflows (new listings) and outflows (sales) in explaining the volatility and co-movement of housing-market variables. An 'ins versus outs' decomposition shows that both inflows and outflows are quantitatively important in understanding fluctuations in houses for sale. The correlations between sales, prices, new listings, and time-to-sell are shown to be stable over time, while the signs of their correlations with houses for sale are found to be time varying. A calibrated search-and-matching model with endogenous inflows and outflows and shocks to housing demand matches many of the stable correlations and predicts that correlations with houses for sale depend on the source and persistence of shocks.

Keywords: search frictions; inflows and outflows; housing-market cyclicality; match quality (search for similar items in EconPapers)
JEL-codes: E22 E32 R21 R31 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2023-11
New Economics Papers: this item is included in nep-dge, nep-rmg and nep-ure
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Published - published in: International Economic Review, 2024, 65 (3), 1415-1440

Downloads: (external link)
https://docs.iza.org/dp16603.pdf (application/pdf)

Related works:
Journal Article: THE INS AND OUTS OF SELLING HOUSES: UNDERSTANDING HOUSING‐MARKET VOLATILITY (2024)
Working Paper: The ins and outs of selling houses: understanding housing-market volatility (2024)
Working Paper: The Ins and Outs of Selling Houses: Understanding Housing-Market Volatility (2022)
Working Paper: The Ins and Outs of Selling Houses: Understanding Housing Market Volatility (2020)
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