Falk, Barry L.; Lee, Bong-Soo

Real Estate Economics Vol. 32 (2004): 645-672.

Time series methods are used to study monthly inventory and sales dynamics in the U.S. market for new single-family homes. The inventory measure used is the inventory of unsold, new single-family homes, regardless of the stage of construction. Stylized facts regarding inventory, sales, the inventory-sales ratio, and the implied series of speculative housing starts are produced. Implications for structural models of housing supply and the relationship of inventory investment in this market to economy-wide inventory investment are considered. Finally, innovation accounting methods are applied to a structural VAR to study the responses of inventories and sales to permanent and transitory shocks.