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Newsletter
Why Housing Has Been So Strong, but Might Not Be for Long
The current monetary policy tightening cycle has seen the fastest increases in the fed funds rate in more than 40 years. While not all tightening cycles have led to significant increases in mortgage rates (e.g., the 1988, 2016, and 2004 cycles), this time around mortgage rates have increased by close to 400 basis points (bps) in the first seven months since lift off (see figure A1 in the appendix). In this Chicago Fed Letter, we describe how this increase has shaped (and is still shaping) the dynamics of the housing sector.
Journal Article
Demographics, COVID-19 Leave Construction with Tight Labor Supply
Although pandemic-induced material shortages may improve, the construction industry’s labor supply challenge is the result of longer-term demographic issues.
Working Paper
On Commercial Construction Activity's Long and Variable Lags
We use microdata on the phases of commercial construction projects to document three facts regarding time-to-plan lags: (1) plan times are long—about 1.5 years—and highly variable, (2) roughly 40 percent of projects are abandoned in planning, and (3) property price appreciation reduces the likelihood of abandonment. We construct a model with endogenous planning starts and abandonment that matches these facts. The model has the testable implication that supply is more elastic when there are more "shovel ready" projects available to advance to construction. We use local projections to ...
Construction’s Impact on Other Industries during the Great Recession
Industries that trade heavily with the construction industry were hit sooner and harder by the Great Recession than those that don’t.