The Unassuming Economist

From a paper by Nigel Meade and Ciaran Driver:

“Policy makers are concerned with the accuracy of GDP forecasts and want to understand the reasons for the revision of forecasts. We study these issues by examining forecasts of annual UK GDP growth by a panel of agents, published monthly by HM Treasury. We focus on two main issues: the developing accuracy of the group-mean forecast as horizons shorten and the identification of information categories underlying agents’ forecast revisions. The accuracy of the group-mean forecast is poor; there is evidence of information rigidity in forecasts within the target year, and accuracy only improves in May of the target year when contemporary information flows lead to increased accuracy. We find a pessimism bias; the median errors of group-mean forecasts are increasingly positive for horizons shorter than 17months. We seek to explain revisions to both long- and short-horizon group-mean forecasts and individual agent forecasts. Modeling individual agents’ forecast revisions using a moving window, we note a consistent tendency by agents to revise their forecast towards the group-mean. Although their importance varied over time, the main information categories explaining revisions were, over longer horizons, the cost of finance, production, and a business confidence indicator. FX rates and inflation were influential over shorter horizons.”

On cross-country:

• Global house prices declined in real terms by 0.8% year on year (yoy) in Q2 2025, slightly less compared with the previous quarter (–1.0%). – BIS
• Where house prices are rising fastest globally – Global Property Guide
• European progressives must tackle housing crisis to beat far right, say researchers. Centre left can win broad support by addressing soaring house prices and rents, according to data analysis – The Guardian
• Commissioner Jørgensen welcomes recommendations by the Housing Advisory Board on how to tackle the housing crisis – European Commission
• New Housing in Europe publication out now – Eurostat
• Real estate investment: micro-apartments as a housing trend. Micro-apartments: the smart housing trend – compact and profitable. Ideal for urban lifestyles, they offer investors high rental income but also come with risks such as higher management costs and vacancies. – UBS

Working papers and conferences:

• The Mortgage Debt Channel of Monetary Policy when Mortgages are Liquid – University of Chicago
• “Giving Up”: The Impact of Decreasing Housing Affordability on Consumption, Work Effort, and Investment – SSRN
• Market segmentation and housing prices. Did relaxed credit standards drive the housing boom that led to the Great Recession? – American Economic Association
• The Global Value of Cities – NBER
• The Spatial Distribution of Income in Cities: New Global Evidence and Theory – NBER
• How spatiotemporal urban expansion shapes heat trends in coastal megacities: Developed vs. developing nations – Urban Climate

On China:

• Why China Can’t Sort Out Its Property Market Mess – Bloomberg

On Australia and New Zealand:

• [Australia] ‘I would just like to see more people housed’: inside NSW’s social housing changes – The Guardian
• [Australia] Australia Caps Risky Loans as Home Prices and Credit Surge – Bloomberg
• [Australia] Australia Building Activity Jumps in Race to Ease Housing Stress – Bloomberg
• [New Zealand] NZ’s housing funk sows doubts on reliable investment strategy, drags on economy – Reuters

On other countries:  

• [Canada] Ontario’s housing affordability crisis extends far beyond Toronto – Fraser Institute
• [Denmark] Danish Home Price Spike Puts Central Bank on Alert for Stability – Bloomberg
• [Hong Kong] Momentum builds: ‘bigger’ Hong Kong property rebound forecast for 2026. Resurgent stock market helps steer secondary home prices to 14-month high as rent index maintains historical peak – South China Morning Post
• [Hong Kong] Three Arrested as Hong Kong Fire Death Toll Rises to at Least 65. Officials said firefighters extinguished fires in four towers of a high-rise complex, and blazes in three others were effectively under control – Wall Street Journal
• [Portugal] Housing crisis creates “new social challenges” in Portugal – European Commission – ENR
• [Switzerland] Swiss regulator warns mortgage risks are rising as banks stretch lending rules – Reuters
• [United Kingdom] Mortgage brokers say house buying at risk from surveyor ‘down valuing’. London and the south-east said to be worst affected, with valuations often coming in at 10% below the agreed sale price – The Guardian
• [Vietnam] Surging Property Prices Draw Bidders for Derelict Vietnam Towers – Bloomberg

From a paper by Jérôme Creel and Jonas Kaiser:

“This paper introduces a novel application of the Updated Okun Method to estimate fiscal multipliers. By leveraging Okun’s Law to compute potential output and the output gap, we construct a new measure of the fiscal stance that improves transparency and interpretability. Applying this approach to France and Italy, we find that both economies were operating below full potential for most of the sample period, and that fiscal policy was more contractionary than standard estimates suggest. Our analysis reveals significant differences in fiscal multiplier effects across the two countries, with evidence of state-dependence in France, where fiscal policy is more effective during periods of economic slack, while no such variation is observed for Italy. These findings underscore the importance of aligning fiscal policy with economic conditions, particularly in the context of public debt sustainability debates.”

On prices, rent, and mortgage:    

• America’s huge mortgage market is slowly dying. Donald Trump’s remedies threaten to inflame a housing crisis – The Economist
• Mortgage lending in America is seizing up. How to revive it. Some rules introduced after the financial crisis have gone too far – The Economist
• The 10 U.S. Cities Seeing the Biggest Home Value Boom Since 2019 – Realtor.com
• Tensions between renters and homeowners challenge Mamdani housing plan. The incoming New York City mayor’s plan relies on higher density in places where some neighbors oppose it. He is scheduled to meet Friday with the president. – Washington Post
• Zillow just revised its home price forecast for 400-plus housing markets. Zillow upgraded its national home price outlook slightly—predicting that over the next 12 months U.S. home prices are likely to rise 1.5%. – Fast Company
• Where Renters and Owners Face the Highest Cost Burdens – NAHB
• Luxury Homes Are Selling Faster as Prices Tick Down—and One Tropical Enclave Has Seen the Steepest Drop – Realtor.com
• Rents Drop in 5 Key Metros—What You Need to Know – Realtor.com
• NAR Housing Market Forecast for 2026—5 Key Takeaways – Realtor.com
• Case-Shiller: National House Price Index Up 1.3% year-over-year in September. FHFA House Prices up 1.7% YoY in September – Calculated Risk
• Freddie Mac House Price Index Up 1.0% Year-over-Year in October. Punta Gorda House Prices Down Over 20% from Recent Peak, Austin Down over 17% – Calculated Risk
• Household Debt Balances Grow Steadily; Mortgage Originations Tick Up in Third Quarter – New York Fed
• Understanding the Federal Home Loan Bank System: What It Is and Why It Matters – New York Fed 

On sales, permits, starts, and supply:    

• Trump needs to tackle housing supply, not mortgage rates. A focus on cutting interest costs only fuels home price inflation, hitting working families – FT
• Existing Home Sales Rise in October – NAHB
• NAR: Existing-Home Sales Increased to 4.10 million SAAR in October. Median House Prices Increased 2.1% Year-over-Year – Calculated Risk
• When Home Sellers Set Prices Too High, They’re Paying for It. More than half of homes sold in 2025 through October had at least one price cut – Wall Street Journal
• Building Material Prices Continued to Rise in September – NAHB
• US Home-Purchase Applications Surge to Highest Since 2023 – Bloomberg
• Pending Homes Sales Climb 1.9% as This Region Outperforms the Rest of the Country – Realtor.com
• The ‘New’ Solution for the N.Y.C. Housing Crisis: Single-Room Apartments. There is a push to revive single-room occupancy housing, where kitchens and bathrooms are shared among apartments as small as 100 square feet each. – New York Times
• Delistings Jump 28% as Sellers Pull Homes Off Market Rather Than Settle For Low Prices – Redfin
• States look for clogs in the housing pipeline. As they seek to lower their residents’ housing costs, states are tweaking land use laws and other regulatory frameworks – Minneapolis Fed

On other developments:    

• The Housing Affordability Crisis Is Accelerating Fastest in Rural America – Redfin
• Job and Housing Stresses Are Caught in a Vicious Loop – Bloomberg
• What incentives are states offering to make houses less vulnerable to extreme weather damage? – Brookings
• Are millennials frozen out of the housing market? The reality may be more interesting. An eye-catching report said the average first-time homebuyer is now 40, but the story is more complex. – Washington Post
• America’s Housing Crisis, in One Chart – New York Times
• Every Housing Down Cycle is “unhappy in its own way” – Calculated Risk
• Mike Bird on the Land Trap and How the History of Housing Impacts the Global Economy – Mercatus Center
• Ezra Klein Needs to Look More Closely at His Housing Chart – CEPR
• Is the housing market at risk as more homeowners slip underwater? The share of mortgages that are underwater inches up to 1.6%—still far below the 23% seen in 2009. – Fast Company
• Pulte’s Move to Fix Credit Scores Is Bad News for Homebuyers. Bill Pulte declared by tweet that homebuying costs would be lower if FICO had competition—a move that instead risks pushing credit-score prices higher. – Bloomberg
• What it Means for Housing if the AI Bubble Bursts—5 Key Takeaways – Realtor.com
• Property Taxes by State – 2024 – NAHB
• L.A. Mayor Karen Bass Says You Can Defeat NIMBYism by Building Less – Reason 
• New York Leads Effort to Stop Plan That Could Cut Housing for 170,000. The Trump administration is pushing a new approach to America’s homeless crisis, favoring shelters and rehabilitation centers over long-term housing for people who use drugs and alcohol. – New York Times

From a paper by Puneet Vatsa, Gabriel Pino, Dragan Miljkovic:

“Using partially identified Bayesian structural vector autoregressions, we examine how food price shocks have influenced core inflation and inflation expectations in the United States since 1990. This is important, given the conspicuousness of food prices and the substantial share of food expenditure in households’ budgets. Shocks raised one-year expectations immediately, with effects lasting nine quarters; they increased core inflation with a short delay. Long-term expectations were largely unaffected. Counterfactuals show that one-year expectations would have been lower in 2020 and 2022 without these shocks. The findings suggest food price shocks warrant a measured response, not an overreaction, from central banks.”