CONSTRUCTION COSTS AND THE SUPPLY OF HOUSING STRUCTURE*

Joseph Gyourko and Albert Saiz

Journal of Regional Science, 2006, vol. 46, issue 4, 661-680

Abstract: ABSTRACT Construction costs account for the bulk of the price of new houses in most markets, but their study has been relatively neglected. We document that there are economically large differences in construction costs across U.S. housing markets. We also estimate a very elastic supply for physical structure; hence, differences in construction activity across markets do not explain the variation in costs. Supply shifters that collectively do account for differences in building costs include the extent of unionization within the construction sector, local wages, local topography in terms of the presence of high hills and mountains, and the local regulatory environment.

Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jregsc:v:46:y:2006:i:4:p:661-680

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