The U.S. Housing Market: A Stock-Flow Consistent Approach

The housing market has usually been analyzed in partial equilibrium models, or adopting a spatial/geographical approach. The aim of this paper is to propose a model for the housing sector in the context of a macroeconomic model for the whole economy, with all major relationships between real and financial markets properly accounted for, and a strong tie with national accounts. The general model is developed in the tradition of dynamic stock-flow consistent models (see for example Godley and Lavoie, 2007). We begin by presenting a general setting for a dynamic model, consistent with the Social Accounting Matrix aprroach to national accounts. We analyze some key variables related to the evolution of the U.S. housing market. Finally, after presenting the key features of the model, we simulate it to analyze its properties and its ability to reproduce some key stylized facts on the recent evolution of the U.S. economy.