In addition, productivity in construction has lagged gains in the  4  This conclusion proved relative robust to alternative models using varying definitions of permanent income and wealth. In all models, the elasticity of the demand for housing relative to user cost was 0.5 and that of consumer durables was 0.9. 4  BIS Review 11/2003  overall productivity of nonfarm businesses.
Consequently, it should not be surprising to see the price of housing rise relative to the prices of other goods and services. The combination of demand and supply factors has caused house price gains to outstrip per capita income gains in recent years.