The Economic Impact of Anticipated House Price Changes - Evidence from Home Sales

Posted: 28 May 2010

See all articles by Norman G. Miller

Norman G. Miller

University of San Diego - Real Estate Institute

Liang Peng

Smeal College of Business, The Pennsylvania State University

Michael Sklarz

Collateral Analytics

Date Written: May 27, 2010

Abstract

If realized house prices have the wealth effect and the collateral effect on the economy, anticipated house price changes should have similar economic effects. This paper empirically analyzes the effects of single family home sales, which are shown to be able to predict house prices in the literature, on economic production, using 372 Metropolitan Statistic Areas in the U.S. from the first quarter of 1981 to the second quarter of 2008 in a panel Vector Error Correction Model. Changes in home sales are found to Granger cause the growth rate of per capita Gross Metropolitan Product, and the dynamic effects are visualized with impulse response functions. Supporting evidence for the economic impact of home sales is also found in contemporaneous regressions.

Keywords: Housing market, home sales

JEL Classification: E23, E30

Suggested Citation

Miller, Norman G. and Peng, Liang and Sklarz, Michael, The Economic Impact of Anticipated House Price Changes - Evidence from Home Sales (May 27, 2010). forthcoming. Available at SSRN: https://ssrn.com/abstract=1616749

Norman G. Miller

University of San Diego - Real Estate Institute ( email )

San Diego, CA
United States

Liang Peng (Contact Author)

Smeal College of Business, The Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Michael Sklarz

Collateral Analytics ( email )

United States

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