2026 Undergraduate Research Showcase

Monetary Policy Surprises & Homeownership

Document Type

Student Presentation

Presentation Date

4-24-2026

Faculty Sponsor

Dr. Kelly Chen

Abstract

This paper aims to investigate the impact of monetary policy surprises on homeownership rates across U.S. metropolitan areas. Using orthogonalized monetary policy surprise (MPS) measures from Bauer and Swanson (2023) combined with Core-Based Statistical Area (CBSA) level data from the Current Population Survey, I analyze whether the transmission of monetary policy shocks through housing markets differs with regional characteristics. A Local Projections Difference-in-Differences (LP-DiD) framework is used to estimate the dynamic response of homeownership to monetary policy surprises while incorporating interactions with median income and poverty rates.

The results are consistent with the theory and show that contractionary monetary policy surprises are associated with declines in homeownership rates overall. However, heterogeneous responses emerge across metropolitan areas depending on the characteristics of the area. Overall, the findings suggest that the housing transmission channel of monetary policy varies across local economic environments.

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