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Measuring Housing Market Slack

Author

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  • Kishor, N. Kundan

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.

Suggested Citation

  • Kishor, N. Kundan, 2025. "Measuring Housing Market Slack," MPRA Paper 127473, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:127473
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    File URL: https://mpra.ub.uni-muenchen.de/127473/1/MPRA_paper_127473.pdf
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    More about this item

    Keywords

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    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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