Macroeconomic Factors Affecting Housing Prices: Take the United States as an Example

Abstract

Residential real estate takes the largest part of asset market in the United States. This study investigates how changes in macroeconomic variables affect changes in housing prices, using time series data from 191 observation samples in the United States over the past 15 years. The dataset was collected from FRED and analysed by Stata/IC 16.1. Based on the model of multiple linear regression, the main results show that stock growth and economic growth are the major indicators of the rise of the housing price index. In contrast, mortgage rates and unemployment rates will have a negative effect on housing price. It is worth noting that in the regression model with 5% significance level, population growth as a determinant is not statistically significant. Compared with the existing literature, the main contribution of this paper is the relatively updated data in recent severe environments (Great Depression and COVID-19) to reinforce key discoveries.