The Factors Which Caused the Decline in the Amount of the Newly One Family Houses Sold in US
The new privately owned one-family house sold (C25) is recognized as great indicator for economy. The monthly data indicates that 250.000 houses were sold in February 2011. Compared to 2006 when 1,061,000 were sold, we understand that the total number of houses sold decreased by 76% in 2011. The purpose of this paper is to analyze factors that determine the decline of number of C25 in US. The empirical results indicate when the interest rate increases 1%, the number of new privately owned one-family houses sold decreases by 20 thousand.When the unemployment rate increases 1%, the number of new privately owned one-family houses sold decreases 81 thousand, holding all other variables constant. The results show a positive relationship may exist if rising home prices increase the quantity demanded for housing. Income and house sold have positive relationship but it’s not significant. For the population variable, the coefficient is a negative number. The result of monthly dummy test indicates that none of the months has significant effects. We could be able to conclude that current mortgage rate is significant at 1% level; mortgage rate at lag one time period is significant at 5% level; both real personal incomes at lag one time period and unemployment rate at lag two time period are significant at 10% level.
International Burch University