Consumer sentiment and house prices: asymmetric evidence from state-level data in the United States

What is it about?

We deviate from previous research and assess the impact of consumer sentiment on house prices by using data from each state of the U.S. We also deviate from previous research by demonstrating that the effects could be asymmetric. When we estimated a linear symmetric model, we found short-run effects of consumer sentiment on house prices in 34 states that lasted into the long run in only 13 states. The comparable numbers by estimating a nonlinear asymmetric model were 47 and 22, respectively. The increase in the number of states where consumer sentiment affects house prices was attributed to the nonlinear adjustments of consumer sentiment.

Featured Image