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Study of the Monthly Supply of Houses versus the 10-Year US Treasury

September 16, 2019

After reviewing 2010-2019 St. Louis Federal Reserve data on the monthly supply of houses (in months) compared to 10-year constant maturing treasury (CMT) rate, we see a relationship between the increase in supply as rates increase. 

 

 

The data is graphed on a scatter plot below showing a positive correlation between the variables.

 

 

Further investigation was performed to see if his relationship is maintained across ten-year vintages from 1963 to the present. We see a similar relationship in the data except for the 2000-2009 vintage.

 

 

Correlation Coefficients for the decades pictured below with 2010-2019 most closely matching the 1990-1999 coefficient as seen on the graph.

 

Date Range        
1963 - 1969     0.18
1970 - 1979     0.21
1980 - 1989     0.41
1990 - 1999     0.68
2000 - 2009    -0.52
2010 - 2019     0.57

 

Total           0.26

 

 

Some data screening was performed by removing the 2007-2009 date range from the dataset. The coefficient for 2000-2006 still remains close to zero at 0.01 with the updated graph pictured below - showing little relationship between the 10-year treasury and the months of supply of housing for the 2000-2006 vintage.

 

 

Resource:  https://fred.stlouisfed.org

 

 

Disclaimer - This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. 

 

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