Benmelech, EfraimGuren, AdamMelzer, Brian T.2022-03-032022-03-032022A. 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 Studies0893-9454https://hdl.handle.net/2144/43958We 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.en-USConsumption and investmentHome buyingHousingHousing marketHousehold spendingArticle297667