“US new home sales unexpectedly rise in September”

The sales of homes in the US rose in September. The CNBC article claims that this signals an increase of demand for housing in the US. In our terms, this means that the demand curve for houses has shifted up and to the left. There are not enough houses though, because the supply curve is not as elastic as the demand curve. In effect, there are not quite enough houses being built to match the demand.

Article: http://www.cnbc.com/2016/10/26/new-home-sales-reported-for-september-2016.html

2 Comments »

  1. Nicky Tynan Said,

    November 2, 2016 @ 3:32 pm

    This is an excellent example. Note that you mean the demand curve has shifted up and to the right: consumers are willing to buy more houses at any given price. Given that supply is price inelastic in the short run, what does this mean should be happening to the price of houses?

  2. amalia bilis Said,

    November 7, 2016 @ 8:41 pm

    If the supply of houses is not increasing, do you think that the government would be making accommodations to refurbish houses that have been boarded up to try to create more houses for the greater demand?

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