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The Ins And Outs Of Selling Houses: Understanding Housing‐Market Volatility

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  • L. Rachel Ngai
  • Kevin D. Sheedy

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

  • L. Rachel Ngai & Kevin D. Sheedy, 2024. "The Ins And Outs Of Selling Houses: Understanding Housing‐Market Volatility," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(3), pages 1415-1440, August.
    • Handle: RePEc:wly:iecrev:v:65:y:2024:i:3:p:1415-1440
    DOI: 10.1111/iere.12693
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    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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