A New Index of Housing Sentiment

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Abstract

We propose a new measure for housing sentiment and show that it accurately tracks expectations about future house price growth rates. We construct the housing sentiment index using partial least squares on household survey responses to questions about buying conditions for houses. We …find that housing sentiment explains a large share of the time-variation in house prices during both boom and bust cycles and it strongly outperforms several macroeconomic variables typically used to forecast house prices.
OriginalsprogEngelsk
UdgivelsesstedAarhus
UdgiverInstitut for Økonomi, Aarhus Universitet
Antal sider31
StatusUdgivet - 14 nov. 2016
NavnCREATES Research Paper
Nummer2016-32

Emneord

  • Housing sentiment, house price forecastability, partial least squares, dynamic model averaging

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