Housing price–volume correlations and boom–bust cycles
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This paper investigates the housing price–volume nexus based on different levels of liquidity for the US new one-family housing market over the period between January 1963 and November 2009. We mainly analyze the differential responses of trading volumes to housing price changes (denoted as price elasticity), employing a quantile cointegrating approach that allows us to capture housing boom–bust cycles earlier. In addition, we also explore the long-term impacts of monetary policies on housing sales. According to our findings, the price elasticities perform differently across the booms and busts of housing markets. Shifts in price elasticities can transmit signals of oncoming upturns, recovery, and downturns of housing cycles, which possibly relate to the business cycle. On the other hand, a contractionary monetary policy exerts a much effective control over an overheated housing market, but an expansionary monetary policy has a relatively small influence on stimulating a depressed housing market. Our findings offer some important suggestions and policy implications.
KeywordsHousing price Housing trading volume Nonlinear relationship Quantile cointegration Momentum cycle
JEL ClassificationC32 G12 E32
The authors are grateful to the comments of the editor and the two anonymous referees on our paper. In addition, we are grateful to National Sun Yat-sen University for financial support through Grant 05C0301051.
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