A1097
Title: Central bank communication and house price expectations
Authors: Pei Kuang - University of Birmingham (United Kingdom) [presenting]
Abstract: A large online survey is used to study how US consumers' house price expectations respond to communication about interest rate changes. Average house price growth expectations respond little to interest rate hikes, while large heterogeneity exists among households with different mortgage statuses or education levels. Communication about rate hikes combined with a simple explanation of the mortgage rate channel causes large downward revisions to housing price expectations, especially for the less well-educated and non-mortgage payers. Personal experiences are closely associated with the mechanisms recalled by households, which crucially determine the direction and size of their house price predictions.
