In Part 1 ("Divergent Markets") of this series, we argue that the recent divergence in housing supplies likely signals a decline in inventories of lower- and middle-tier homes nationwide. Part 2 ("Rental Demand") discusses the role that rental-market developments have played in exacerbating this...

In Part 1 ("Divergent Markets") of this three-part series, we document that the recent divergence in inventories of new and existing homes seems to reflect a scarcity of lower- and middle-tier homes. We now examine one potential factor contributing to this shortage: rental demand