What would be the effect on the equilibrium price and equilibrium quantity of new housing if mortgage interest rates rise and the costs of building a house rise simultaneously?

Question

Quizplus · Accepted Answer

When mortgage interest rates rise, the demand for new housing decreases, leading to a potential decrease in the equilibrium price and quantity. Simultaneously, if the costs of building a house rise, the supply of new housing decreases, leading to a potential increase in the equilibrium price and a decrease in the equilibrium quantity. The combined effect makes the direction of the change in equilibrium price uncertain (it could increase, decrease, or stay the same depending on the relative magnitudes of the shifts in demand and supply), but the equilibrium quantity will unambiguously fall due to both demand and supply shifts.

What Would Be the Effect on the Equilibrium Price and Equilibrium