Search and matching in the housing market

Housing markets clear partly through the time buyers and sellers spend on the market, and the readiness with which they transact with each other. Applying a random matching model to unique multi-year, multi-market survey data on both buyers and sellers, we examine how demand affects housing market liquidity. We find that buyer time on the market, the number of homes buyers visit, and especially seller time on the market all decrease with demand, with a much greater sensitivity to demand growth than its level. This is consistent with a straightforward matching model with a lag in seller response. Our findings imply that the elasticity of the hazard that any given seller will be contacted by a buyer, with respect to the buyer-seller ratio, is 0.84, assuming a constant returns to scale matching function.