Making the house a home: the stimulative effect of home purchases on consumption and investment
Files
Accepted manuscript
Date
2022
DOI
Authors
Benmelech, Efraim
Guren, Adam
Melzer, Brian T.
Version
Accepted manuscript
OA Version
Citation
A. Guren, E. Benmelech, B. Melzer. 2022. "Making the House a Home: The Stimulative Effect of Home Purchases on Consumption and Investment." (Forthcoming in) The Review of Financial Studies
Abstract
We introduce and quantify a new channel through which the housing market affects household spending: the home purchase channel. Households spend on average $8,000 more on home-related durables and home improvements in the two years following a home purchase. Expenditures on nondurables and durables unrelated to the home remain unchanged or decrease modestly. The home purchase channel played a substantial role in the Great Recession, accounting for one-third of the decline in spending on home-related durables and home improvements from 2005 to 2010.