Consumer Sentiment and Housing aMarket Activities: Home Sales and Housing Starts in U.S.
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This study examines the influence of consumers’ sentiment about the housing market on housing market outcomes. Error correction models are estimated focusing on the long run properties and short run dynamics of home sales and housing starts. We find that home sales and housing starts are cointegrated with a measure of consumer sentiment as well as key economic variables, and there exists an error correction mechanism in home sales and housing starts. The speed of adjustment correcting disequilibrium conditions is relatively fast in the new home sales market and relatively slow in the existing home sales market. Consumer sentiment is found to be one of the major variables affecting the short run change in home sales and housing starts. The consumer sentiment variable also produces a multiperiod effect on housing and this effect likely increases the volatility of the market. Overall, our results indicate that market fundamental variables are not sufficient statistics to represent observed housing market outcomes and consumers’ attitudes provide significant and valuable additional information.
Abstract
This study examines the influence of consumers’ sentiment about the housing market on housing market outcomes. Error correction models are estimated focusing on the long run properties and short run dynamics of home sales and housing starts. We find that home sales and housing starts are cointegrated with a measure of consumer sentiment as well as key economic variables, and there exists an error correction mechanism in home sales and housing starts. The speed of adjustment correcting disequilibrium conditions is relatively fast in the new home sales market and relatively slow in the existing home sales market. Consumer sentiment is found to be one of the major variables affecting the short run change in home sales and housing starts. The consumer sentiment variable also produces a multiperiod effect on housing and this effect likely increases the volatility of the market. Overall, our results indicate that market fundamental variables are not sufficient statistics to represent observed housing market outcomes and consumers’ attitudes provide significant and valuable additional information.
참고문헌 (24)
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