Home Price Expectations and Spending: Evidence from a Field Experiment

We conduct a field experiment with US households to study how expectations about long-run home price growth shape spending decisions. In our survey, we exogenously vary these expectations by providing households with different expert forecasts. Linking the survey data with rich home-scanner data, we document that homeowners’ spending is inelastic to home price expectations. By contrast, renters reduce their spending when expecting higher home price growth. These findings reflect differences in the tendency to be a future net buyer of housing across the two groups. Our study highlights consequences of asset price growth for consumption inequality.