The Dynamic Impact of Macroeconomic Aggregates on Housing Prices and Stock of Houses: A National and Regional Analysis

This article analyzes the dynamic effects of four key macroeconomic variables on the housing prices and the stock of houses sold on the national and regional levels using a nonstructural estimation technique. The impulse response functions derived from the VAR suggest that macroeconomic variables produce cycles in housing prices and houses sold. The housing market was found to be very sensitive to shocks in the employment growth and mortgage rate at both the national and regional levels. In particular, regional housing prices reflect regional employment growth, as well as national mortgage rates. The study also reveals that the economic variables have a different impact on the dynamic behavior of housing prices and the number of houses sold in different regions at different time periods and that these economic aggregates alone cannot explain the fluctuations in real estate values and construction levels that occurred in some regions.