Author(s)

Yiming Li

Corresponding Author

Yiming Li

Abstract

During the Great Recession of 2008 triggered by the housing crisis, the Federal Reserve adopted quantitative easing to influence macroeconomic variables. The impacts of the policy on housing price indices in different U.S. States are quite distinct: some continued to plummet while others suffered only a mild drop. In view of this phenomenon, this paper studies whether there are spatial differences in the impact of macroeconomic factors on housing prices. The New England, Pacific and mountainous area in the United States are selected as representative regions. The macroeconomic variables of concern include real GDP, real disposable personal income, 1-year, 5-year, 10-year treasury rate, M2 Money Stock, unemployment rate and federal funds rate. Through the regionalized regression analysis, we can conclude that there is fairly convincing evidence suggesting the sensitivity of HPI to the macroeconomic variables does vary from place to place. Interest rates (especially the one-year treasury rate), output and price level are all quite significant for the three regions considered except for perhaps the Mountain states.

Keywords

Housing price index (HPI); Macroeconomic factors