Homebuilder Concentration's Effect on New Home Prices

Ryan Zickel
Dr. Xiaofen Chen, Faculty Mentor

Housing affordability is one of the most pressing issues facing new generations of Americans, but solutions remain hotly debated. This paper analyzes the effect of homebuilder concentration on new home prices using market-level data from Builder Magazine and individual housing data from Redfin, focusing on a largely overlooked factor in previous research search. An OLS multiple linear regression is used to measure this relationship and to account for additional relevant variables. The paper finds that the relationship between market concentration and new home prices does not follow a frequently assumed positive relationship, but rather a downward-opening parabola shape. These findings offer an original, nuanced understanding of how homebuilder concentration may affect home prices and provide guidance for designing policies to promote housing affordability.

Keywords: market concentration, competition, housing affordability

Topic(s):Economics

Presentation Type: Oral Presentation

Session: TBA
Location: TBA
Time: TBA