Why Homeowners Spend More When Inflation Rises (And Renters Don’t)
What new research reveals about who actually responds to inflation—and why it matters for your wallet
We talk about inflation like it’s a something everyone experiences equally.
Eggs cost more.
Gas is expensive.
Interest rates climb.
But beneath the surface, how we experience—and respond to—inflation varies dramatically. Especially when it comes to whether or not we own a home.
New research from economists Jessica Piccolo and Yuriy Gorodnichenko makes that point clearly: homeowners pay more attention to inflation—and are far more likely to change their spending behavior—than renters.
That has implications not just for investors and consumers, but for anyone thinking about how economic policy lands in the real world.
Because inflation might dominate the headlines—but whether you listen, and whether you act, might depend on whether you’ve got a mortgage.
Who Reacts to Inflation (and How)?
To find out who pays attention to inflation—and who actually changes their spending because of it—researchers ran a series of randomized experiments using five waves of nationally representative data from the Nielsen Homescan Panel (2018–2023).
Each household was randomly assigned to receive one of three types of information:
Recent inflation figures
The Federal Reserve’s inflation target
A forecast of inflation.
Then they were asked about their inflation expectations.
Four months later, the researchers followed up to see who bought big-ticket items like cars, electronics, or home appliances.
The goal was to measure whether receiving information changed people’s expectations, and whether those expectations changed their behavior.
Key Finding #1: Homeowners are already paying attention. Renters aren’t.
When renters received new inflation information, they adjusted their expectations by a lot.
Homeowners barely moved.
That’s a strong signal that homeowners were already paying attention. They came into the survey with a relatively clear view of where inflation was headed—and the Fed couldn’t tell them much they didn’t already know.
Renters, on the other hand, showed big swings in expectations when given new information. That suggests they weren’t tracking inflation as closely, and that Fed messaging actually helped update their mental model.
If you own your home—especially if you’ve paid it off—there’s a good chance you’re already tuned in. If you rent, inflation might not hit your radar until it’s in your rent renewal notice.
This is not too surprising as for most homeowners, their house is their largest asset and inflation has a significant impact on the price of their home and mortgage rates.
If 90% of your net-worth was tied up in your home, you’d probably pay pretty close attention to anything that might impact your home’s market value.
Key Finding #2: Only homeowners changed their spending
This is where things get interesting.