Monetary Policy, Real Estate Financing, and Housing Supply

Eric Milstein, Economics PhD Student

I (Milstein) aim to study the transmission of U.S. monetary policy to financing costs and construction activity in the housing sector. Residential investment is one of the most cyclical and interest rate-sensitive components of GDP, but there is limited existing research studying underlying mechanisms. For example, monetary policy can affect new housing construction through both its indirect effect on household mortgage demand, as well as its direct effect on the cost and availability of financing for real estate developers and homebuilders. This project aims to better understand the empirical magnitude of these channels, assess heterogeneities across firms and geographies, and evaluate their broader macroeconomic implications. To do so, I hope to obtain data on housing construction from a private data provider called Zonda.