Market Concentration in Homebuilding

We investigate the impact of increasing concentration in local residential construction markets on housing production. We show that the increase in concentration in the past decade has led to lower production volume, fewer units in the production pipeline, and greater unit price volatility. Our results imply that the greater concentration has decreased the annual value of new housing production by $106 billion. Because housing is a determinant of the business cycle these findings provide further evidence that the secular decline in competitive intensity in the American economy is altering macroeconomic dynamics