Housing inventory and completion

The model of Hendry (1986) is extended to a vector autoregressive system, i n order to examine the sources of fluctuations in housing completions and i nventory. The time-series properties of the completion rate are examined as well as those of the accumulated inventory. Shocks to income, interest rat es, materials price, and housing price are examined. The completion rate ap pears to be more or less constant, unaffected by these shocks, so that inve ntory is evidently the control variable for builders.