CHAPTER 14

Estimating the Housing Supply

In collaboration with Jack Hoy and Robert Perina

According to a report by Reuters, housing starts in the United States have soared as of July 2015; new residential construction is at one of its highest levels in the last 8 years. While this is could be a good sign for the economy, many may wonder why this is happening. Clearly, there are a variety of factors that go into an increase in housing starts, but what are the most important ones? Christopher Mayer and Tsuriel Somerville present and analyze a model that helps answer this question, which leads to valuable conclusions about the implications of this economic signal.

Mayer and Somerville (2000) explain new housing construction as a function of changes ...

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