This study examines the construction effect and supply time lag associated with public housing site policy by analyzing confidential data of state-owned housing firm (Korea Land & Housing Corporation) in Korea. Korea’s policy on public housing sites is dualistic, with state developers developing land and private corporations acquiring it for the purpose of constructing structures. These institutional characteristics contribute to the volatility of residential investment by supplying public housing sites in a short period of time during a period of increased private land demand, rather than the government steadily supplying housing sites. Due to the cyclical nature of home sales and their reliance on private finance, the supply time lag for public housing varies over time. While public housing sites have increased in the Seoul area in response to recent increasing of housing prices, large-scale housing site plans such as the “3rd new city” should take into account these endogenous limits.