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House price expectations and inflation expectations: evidence from survey data

Author

Listed:
  • Vedanta Dhamija

    (Bank of England)

  • Ricardo Nunes

    (University of Surrey)

  • Roshni Tara

    (Bank of England)

Abstract

Housing is a closely monitored and prominent sector for households. We find that households in the United States tend to overweight house price expectations when forming inflation expectations with a coefficient of 25%–45%, significantly above the weight of house prices in the inflation index. We first use two data sets, a multitude of controls, and an instrumental variable approach to address endogeneity. We then use a second strategy based on household heterogeneity. As expected, we find a significant effect of numeracy skills and whether households moved house recently. We model this household behaviour in a two-sector New Keynesian model with an overweighted and a non-overweighted sector and show that overweighted sectors are disproportionately more important for monetary policy.

Suggested Citation

  • Vedanta Dhamija & Ricardo Nunes & Roshni Tara, 2026. "House price expectations and inflation expectations: evidence from survey data," Bank of England Staff Working Paper series 1169, Bank of England.
    • Handle: RePEc:boe:boeewp:023291
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    File URL: https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2026/house-price-expectations-inflation-expectations-evidence-from-survey-data.pdf
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    More about this item

    Keywords

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    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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