Supply Constraints do not Explain House Price and Quantity Growth Across U.S. Cities

Schuyler Louie, John A. Mondragon and Johannes Wieland

No 33576, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The standard view of housing markets holds that the flexibility of local housing supply–shaped by factors like geography and regulation–strongly affects the response of house prices, house quantities and population to rising housing demand. However, from 2000 to 2020, we 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. We find the same pattern when we expand the sample to 1980 to 2020, use different elasticity measures, and when we instrument for local housing demand. Using a general demand-and-supply framework, we show that our findings imply that constrained housing supply is relatively unimportant in explaining differences in rising house prices among U.S. cities. These results challenge the prevailing view of local housing and labor markets and suggest that easing housing supply constraints may not yield the anticipated improvements in housing affordability.

JEL-codes: E22 J61 R21 R31 R52 (search for similar items in EconPapers)
Date: 2025-03
Note: CF EFG LS ME PE PR
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w33576.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
Working Paper: Supply Constraints Do Not Explain House Price and Quantity Growth Across U.S. Cities (2025)
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:nbr:nberwo:33576

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w33576
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().