Date of Award
Spring 5-2026
Language
English
Document Type
Honors Thesis
Degree Name
Bachelor of Arts
Department
Economics
Advisor/Committee Chair
Yue Li
Committee Member
Ben Griff
Abstract
When the Federal Reserve raised rates from near zero to 525 basis points between 2022 and 2023, standard theory predicted a broad correction in U.S. housing market. In most metropolitan areas, that correction did not arrive. This paper examines why housing price appreciation persisted across cities with fundamentally different structural characteristics, and which factors best explain the cross-city variation in appreciation rates observed across the nation. Using a panel of 83 Metropolitan Statistical Areas across four symmetric 24-month periods from December 2017 through December 2025, each aligned with a distinct Federal Reserve rate period, the study estimates OLS models with standard errors corrected for unequal variance across cities. The primary dependent variable is the Zillow Home Value Index (ZHVI) two-year price change; the FHFA House Price Index is used as a robustness check across all four periods. The key independent variables are housing supply elasticity from Saiz [1] and net domestic migration rates from the U.S. Census Bureau. Construction cost data from the RSMeans City Cost Index were collected but ultimately excluded as a regressor due to high collinearity with the supply elasticity measure, this limitation is discussed in the paper. The central finding is that domestic migration is the dominant and consistent driver of cross-city price variation, recording statistically significant positive coefficients across periods and in the pooled specification (β₂ = +0.114, p = 0.001). Supply elasticity is statistically insignificant in the primary Zillow specifications but emerges as a significant negative predictor in the FHFA repeat-sales robustness check during the COVID period (β₁ = −2.606, p = 0.005), consistent with the hypothesis that physical supply constraints amplify appreciation under acute demand pressure.
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Recommended Citation
Patel, Vasu, "Supply Constraints and Domestic Migration as Drivers of U.S. Housing Price Appreciation" (2026). Economics. 9.
https://scholarsarchive.library.albany.edu/honorscollege_econ/9