Turnover as a Measure of Demand for Existing Homes

Changes in the turnover of existing homes are often equated with changes in housing demand, but it is not clear if, or why, this linkage exists. This paper documents the positive correlation between changes in turnover and changes in housing demand and develops a search model that explain the linkage. One implication of the analysis is that, for high frequency data, turnover is superior to price as an indicator of change in housing demand.