Supply Constraints Do Explain House Price and Quantity Growth Across U.S. Cities

Anthony Murphy and Maddie Shaheen

No 2635, Working Papers from Federal Reserve Bank of Dallas

Abstract: In a widely cited working paper, Louie, Mondragon and Wieland (2025) find that higher income growth predicts the same growth in house prices, housing quantity and population regardless of a city's estimated housing supply elasticity, implying that constrained housing supply is relatively unimportant in explaining differences in rising house prices among U.S. cities. We show that their findings do not hold up—our evidence is that supply constraints do explain new housing supply and house prices across U.S. cities, in line with the literature. Inter alia, we model the effect of supply constraints on new housing supply (proxied by permits), exploiting the variation in annual data and controlling for other factors using year and MSA fixed effects.

Keywords: housing supply; house prices; housing supply elasticity; housing supply constraints; metropolitan statistical areas (MSAs) (search for similar items in EconPapers)
JEL-codes: C23 R21 R31 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2026-10-06
References: Add references at CitEc
Citations:

Downloads: (external link)
https://dallasfed.org/research/papers/2026/wp2635.pdf Full text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (https://dallasfed.org/research/papers/2026/wp2635.pdf [301 Moved Permanently]--> https://www.dallasfed.org/research/papers/2026/wp2635.pdf)

Related works:
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:fip:feddwp:103914

Ordering information: This working paper can be ordered from

DOI: 10.24149/wp2635

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of Dallas Contact information at EDIRC.
Bibliographic data for series maintained by Amy Chapman ().