The Ins and Outs of Selling Houses: Understanding Housing-Market Volatility

50 Pages Posted: 16 Nov 2023

See all articles by Rachel Ngai

Rachel Ngai

London School of Economics & Political Science (LSE) - Department of Economics; HKUST Business School

Kevin Daniel Sheedy

London School of Economics

Multiple version iconThere are 2 versions of this paper

Abstract

The housing market is subject to search frictions in buying and selling houses. This paper documents the role of inflows (new listings) and outflows (sales) in explaining the volatility and co-movement of housing-market variables. An 'ins versus outs' decomposition shows that both inflows and outflows are quantitatively important in understanding fluctuations in houses for sale. The correlations between sales, prices, new listings, and time-to-sell are shown to be stable over time, while 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 correlations with houses for sale depend on the source and persistence of shocks.

Keywords: housing-market cyclicality, inflows and outflows, search frictions, match quality

JEL Classification: E32, E22, R21, R31

Suggested Citation

Ngai, Liwa Rachel and Sheedy, Kevin Daniel, The Ins and Outs of Selling Houses: Understanding Housing-Market Volatility. IZA Discussion Paper No. 16603, Available at SSRN: https://ssrn.com/abstract=4634509 or http://dx.doi.org/10.2139/ssrn.4634509

Liwa Rachel Ngai (Contact Author)

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 207 955 7017 (Phone)
+44 207 831 1840 (Fax)

HKUST Business School ( email )

Clear Water Bay
Kowloon
Hong Kong

Kevin Daniel Sheedy

London School of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 207 107 5022 (Phone)
+44 207 955 6592 (Fax)

HOME PAGE: http://personal.lse.ac.uk/sheedy/

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