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The ins and outs of selling houses: understanding housing-market volatility

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  • Ngai, L. Rachel
  • Sheedy, Kevin D.

Abstract

This article documents the role of inflows (new listings) and outflows (sales) in explaining the volatility and comovement of housing-market variables. An “ins versus outs” decomposition shows that both flows are quantitatively important for housing-market volatility. The correlations between sales, prices, new listings, and time-to-sell are stable over time, whereas the signs of their correlations with houses for sale are found to be time-varying. A calibrated search-and-matching model with endogenous inflows and outflows and shocks to housing demand matches many of the stable correlations and predicts that the correlations with houses for sale depend on the source and persistence of shocks.

Suggested Citation

  • Ngai, L. Rachel & Sheedy, Kevin D., 2024. "The ins and outs of selling houses: understanding housing-market volatility," LSE Research Online Documents on Economics 121451, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:121451
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    File URL: http://eprints.lse.ac.uk/121451/
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    References listed on IDEAS

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    Cited by:

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    3. Miroslav Gabrovski & Victor Ortego-Marti, 2025. "Home Construction Financing and Search Frictions in the Housing Market," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 55, January.

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    More about this item

    Keywords

    housing-market cyclicality; inflows and outflows; search frictions; match quality;
    All these keywords.

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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