Measuring Housing Market Slack

N. Kundan Kishor

MPRA Paper from University Library of Munich, Germany

Abstract: This paper develops a framework to estimate U.S. housing market slack-the deviation of inventory from equilibrium levels needed for stability. We measure slack as a common cyclical component of existing and new home inventories that drives house prices through a housing Phillips curve. Results show a statistically significant inverse relationship between slack and price growth, with persistent negative slack since 2010 and extreme tightness during the pandemic. A shock to the estimated housing market slack generates substantial, lasting effects on house prices and rents, with rental impacts peaking 24 months after initial shocks.

Keywords: Housing Market Slack; Housing Phillips Curve; Natural Level of Housing Inventory; State Space Model. (search for similar items in EconPapers)
JEL-codes: E00 E31 E37 R21 R31 (search for similar items in EconPapers)
Date: 2025-10
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:127473

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