Introduction

The real estate has been playing an integral role in the economy of the United States. The housing facilities are provided by residential real estate to the residents of the USoften, it is the most and greatest source of the saving and wealth for many families. The commercial real estate includes spaces for office, manufacturing and retail and create job opportunities.Real estate investment and businessis a source of revenuefor millions of dollars.

In the calendar year 2017, the construction of the real estate has contributed to approximately $1.07 trillion to the economic output of nation successfully(AMADEO, 2018).

In the given dissertation, it is discussed thatthe home sales in United States have droppedbelow expectation in April, the reason behind this decline in home sales is that there has been a shortage of property of home sales in that period.

The fall or decline in the home prices lasts an impact on the economy extensively because housing is one of the biggest fundamentals of household wealth.

Economics Project Real Estate Harvard Case Solution & Analysis

Analysis

The decline in the home sales in United State shas led to the year-to-year biggest decline in the years as the chronic shortage of homes has lifted home prices. In addition to this, the shortage has kept the first time buyers out of the market.

Falling home sales in United States have raised many concerns due to which the home market is losing momentum.

A severe and extensive shortage of homes is sidelining the first time buyers and pushing up prices particularly on the lower end of the market. Economists are worried regarding increased rate of mortgages and the demand tends to be decreasing due to this reason.

The changes in the real estate lasts an impact on each of the following variables which are discussed below;

Consumption/consumer:

The decline in the home sales would put the customers in difficulty as they would findit harder to get a home in the biggest economy of the United States. The economy of the United States might give supportive reasons to make investment in the new home to the residents.

Demand:

The effect of the sales declineson the demand would hurt as there would be no more properties available for sale and the demand would be negatively decreased and the consumers will no longer demand for houses.

In addition to this, the houses will not able to keep up with the demand. If the demand for the remaining property left would be increased this may become the reason for inflation in the economy of the United States.

Supply:

Supply of the home sales would be tighter in the coming years as the supply of home sales would be limited. The weakness in the sales of homes is largely a function of the constraints in supply rather than absence in demand.

If the supply would be limited as compared to demand, there would not be a sizable increase in the inflation(US Pending Home Sales: How Does It Affect Traders?, 2017)

Price level:

If the prices of homes increase, it might encourage the spending of the consumer, after which the consumer’s aggregate demand would be increased. In addition to this, the growth of the economy would be higher............

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