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Is the Recent Tax Reform Playing a Role in the Decline of Home Sales?

Casey McQuillan and Richard Peach ()
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Casey McQuillan: Research and Statistics Group

No 20190415, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: From the fourth quarter of 2017 through the third quarter of 2018, the average contract interest rate on new thirty-year fixed rate mortgages rose by roughly 70 basis points�from 3.9 percent to 4.6 percent. During this same period, there was a broad-based slowing in housing market activity with sales of new single-family homes declining by 7.6 percent while sales of existing single-family homes fell by 4.6 percent. Interestingly though, these declines in home sales were larger than in the two previous episodes when mortgage interest rates rose by a comparable amount. This post considers whether provisions in the Tax Cuts and Jobs Act of 2017 (TCJA) might have also contributed to the recent decline in housing market activity.

Keywords: Housing; Tax Reform (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2019-04-15
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