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Like other macroeconomic variables, residential investment has become much less volatile since the mid-1980s (recent experience notwithstanding.) This pa- per explores the role of structural change in this decline. Since the the early 1980s there have been many changes in the underlying structure of the economy, including those in the mortgage market which have made it easier to acquire a home. We examine how these changes afiect residential investment volatility in a life-cycle model consistent with micro evidence on housing choices. We flnd that a decline in the rate of household formation, increased delay in marriage, and an increase in the cross-sectional variance of earnings drive the decline in volatility. Our flndings provide support for the view that the \Great Modera- tion" in aggregate ∞uctuations is not just due to smaller aggregate shocks, but is driven at least in part by structural change.

First-Time Home Buyers and Residential Investment Volatility