Did the Housing Boom Increase Household Spending?

The brief’s key findings are:

• Regional variations in U.S. house prices provided a natural experiment to test how price changes influence household spending.

• Households age 51 and over who saw rapid growth in house prices increased their spending on non-durables (e.g., meals out, vacations, and entertainment).

• The annual increase was modest but, if sustained over time, could be substantial.

• Interestingly, when house prices fell, households did not appear to tighten their belts.