Housing-market disequilibrium: an examination of housing-market price and stock dynamics 1967–1998

Abstract

Recent research has recognized that the market for owner-occupied housing is often inefficient and adjusts slowly to changes in market conditions. This paper develops a disequilibrium housing-market model that separates disequilibrium generated by supply-side disturbances from those arising from demand disturbances. I apply the model to the US housing market for the period 1967–1998. Although price changes guide the market toward a new equilibrium, inefficiencies impede market clearing. Thus, the market is characterized by sustained periods of disequilibrium.