Changing supply elasticities and regional housing booms

Knut Are Aastveit, Bruno Albuquerque and Andre Anundsen ()

No 2019/8, Working Paper from Norges Bank

Abstract: Recent developments in US house prices mirror those of the 1996-2006 boom, but the recovery in construction activity has been weak. Using data for 254 US metropolitan areas, we show hat housing supply elasticities have fallen markedly in recent years. Housing supply elasticities have declined more in areas where land-use regulation has tightened the most, and in areas that experienced the sharpest housing busts. A lowering of the housing supply elasticity implies a strengthened price responsiveness to demand shocks, whereas quantity reacts less. Consistent with this, we find that an expansionary monetary policy shock has a considerably stronger effect on house prices during the recent recovery than during the previous housing boom. At the same time, building permits respond less.

Keywords: House prices; Heterogeneity; Housing supply elasticities; Monetary policy (search for similar items in EconPapers)
JEL-codes: C23 E32 E52 R31 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2019-04-12
New Economics Papers: this item is included in nep-mac and nep-ure
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Related works:
Journal Article: Changing Supply Elasticities and Regional Housing Booms (2023)
Working Paper: Changing supply elasticities and regional housing booms (2020)
Working Paper: Changing supply elasticities and regional housing booms (2019)
Working Paper: Changing supply elasticities and regional housing booms (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:bno:worpap:2019_08

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