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

L. Rachel Ngai and Kevin Sheedy

No 2213, Discussion Papers from Centre for Macroeconomics (CFM)

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 their correlations with houses for sale are found to be time varying. Using a housing-market model with endogenous inflows and outflows, a single persistent housing-demand shock can explain all the patterns of co-movement among variables except for houses for sale. Consistent with the data, the model does not predict there is an invariant structural relationship between houses for sale and other variables — the correlation depends on the source and persistence of shocks.

Keywords: housing-market cyclicality; stocks and flows; search frictions (search for similar items in EconPapers)
Pages: 43 pages
Date: 2022-08
New Economics Papers: this item is included in nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.lse.ac.uk/CFM/assets/pdf/CFM-Discussio ... MDP2022-13-Paper.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 (2023)
Working Paper: The Ins and Outs of Selling Houses: Understanding Housing Market Volatility (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cfm:wpaper:2213

Access Statistics for this paper

More papers in Discussion Papers from Centre for Macroeconomics (CFM) Contact information at EDIRC.
Bibliographic data for series maintained by Helen Power ().