Changing supply elasticities and regional housing booms

In the new CAMP working paper 04/2019, Aastveit, Alberquerque, and Anundsen investigate the US house market in light of recent developments in housing supply elasticities. They find that housing supply elasticities have fallen in recent years, and consistently, monetary policy shocks have a stronger effect on house prices during the recent recovery, than the previous boom. Building permits, however, respond less to monetary policy shocks. Their findings can be interpreted as evidence that developers are less price-responsive than before, in fear of a new bust.

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