TCJA's Impact on Home Sales

A new study of home sales between the fourth quarter of 2017 and the third quarter of 2018 assesses the impact of the Tax Cuts and Jobs Act (TCJA) on real estate activity.

The New York Federal Reserve's study data is seasonally-adjusted, and finds that new-home sales dropped 7.6 percent at the national level, with the biggest declines in the West and Northeast regions. MarketWatch reports that the opportunity cost of buying a home grew between one and five percent for homeowners impacted by TCJA code changes, meaning that buying a home got more expensive during the time studied.

The researchers, Richard Peach and Casey McQuillan, examined the influence of a variety of factors — mortgage interest rates, property tax rates, the top marginal income-tax rate and home price appreciation. Their findings suggest that the recent changes to the federal tax code have contributed to the slowdown in home sales that occurred throughout much of last year.

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