Macro Indicators and Housing Prices in the U.S.

Abstract

This study examines the influence of macroeconomic indicatorsU.S. GDP, tax rates, population, and interest rateson housing prices across the United States, utilizing data from 1982 to 2018 sourced from the Federal Reserve Economic Data (FRED). Employing a comprehensive analytical framework, including multiple linear regression, time series analysis, and a mixed-effects model, the research identifies GDP and tax rates as significant factors affecting housing prices. GDP positively correlates with housing prices, whereas higher tax rates have a negative impact. The study highlights the importance of accounting for regional variations through mixed-effects modeling, which captures the diverse impacts of economic indicators across different states. This approach offers nuanced understandings to the real estate market's dynamics, emphasizing the role of economic growth and fiscal policies. The findings aid policymakers in understanding the economic forces shaping housing markets and suggest further research avenues, particularly in incorporating recent global economic events like the COVID-19 pandemic.