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House Price Responses to Monetary Policy Surprises: Evidence from the U.S. Listings Data

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  • Denis Gorea
  • Oleksiy Kryvtsov
  • Marianna Kudlyak

Abstract

Existing literature documents that house prices respond to monetary policy surprises with a significant delay, taking years to reach their peak response. We present new evidence of a much faster response. We exploit information contained in listings for the residential properties for sale in the United States between 2001 and 2019 from the CoreLogic Multiple Listing Service Dataset. Using high-frequency measures of monetary policy shocks, we document that a one standard-deviation contractionary monetary policy surprise lowers housing list prices by 0.2–0.3 percent within two weeks—a magnitude on par with the effect on stock prices. House prices respond stronger to the surprises to future rates as compared to the surprise changes in the federal funds rate. Sale prices are mostly pre-determined by list prices and do not independently respond to monetary policy surprises.

Suggested Citation

  • Denis Gorea & Oleksiy Kryvtsov & Marianna Kudlyak, 2022. "House Price Responses to Monetary Policy Surprises: Evidence from the U.S. Listings Data," Working Paper Series 2022-16, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfwp:94745
    DOI: 10.24148/wp2022-16
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    Cited by:

    1. William D. Larson, 2022. "Effects of Mortgage Interest Rates on House Price Appreciation: The Role of Payment Constraints," FHFA Staff Working Papers 22-04, Federal Housing Finance Agency.
    2. Lukas Hack & Davud Rostam-Afschar, 2024. "Understanding Firm Dynamics with Daily Data," CRC TR 224 Discussion Paper Series crctr224_2024_593, University of Bonn and University of Mannheim, Germany.
    3. Daniel R. Ringo, 2024. "Inframarginal Borrowers and the Mortgage Payment Channel of Monetary Policy," Finance and Economics Discussion Series 2024-069, Board of Governors of the Federal Reserve System (U.S.).
    4. Daniel R. Ringo, 2023. "Monetary Policy and Home Buying Inequality," Finance and Economics Discussion Series 2023-006, Board of Governors of the Federal Reserve System (U.S.).
    5. Denis Gorea & Augustus Kmetz & Oleksiy Kryvtsov & Marianna Kudlyak & Mitchell Ochse, 2023. "House Prices Respond Promptly to Monetary Policy Surprises," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, vol. 2023(09), pages 1-5, March.

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    More about this item

    Keywords

    house prices; monetary policy; monetary policy transmission; house sales;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • 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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