House price expectations and household consumption

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This paper investigates the relationship between individuals’ house price expectations and their spending intentions using microdata from the New York Fed Survey of Consumer Expectations and the Michigan Survey of Consumers. The results suggest that people who anticipate rising house prices express greater readiness to increase their household spending. A one percentage point increase in nationwide house price expectations over the next 12 months is associated with an approximate 0.09 percentage point increase in expected total household spending growth over the same period. Moreover, the relationship between house price expectations and intended household spending is more pronounced for those who are likely to experience borrowing constraints.