Revisiting U.S. House Price Convergence: Evidence from State and Metropolitan Area Panels

Abstract

This study re-examines the long-run behavior of house prices across all U.S. states and the 100 largest metropolitan areas, employing a regression-based convergence test and clustering procedure proposed by Phillips and Sul (2007, 2009). The analysis spans the period from 1991Q1 to 2023Q2. The results reveal that U.S. house prices do not converge to a common steady state, suggesting heterogeneous housing price dynamics across states and metropolitan areas. Both states and metropolitan areas form multiple convergence clubs, which do not correspond to the conventional U.S. Census regions. This finding implies that geographically neighboring states and cities do not necessarily exhibit shared house price dynamics.