housing market expectation

Last registered on April 02, 2024


Trial Information

General Information

housing market expectation
Initial registration date
February 01, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
April 02, 2024, 12:56 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.


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Primary Investigator

Auburn University

Other Primary Investigator(s)

Additional Trial Information

On going
Start date
End date
Secondary IDs
Prior work
This trial is based on or builds upon one or more prior RCTs.
We did pre-study to elicit housing market trends
External Link(s)

Registration Citation

Huseynov, Samir. 2024. "housing market expectation." AEA RCT Registry. April 02. https://doi.org/10.1257/rct.12935-1.0
Experimental Details


Background: The effectiveness of monetary policy largely depends on the extent to which it influences agents' expectations. Financial markets and investors typically pay close attention to Central Bank announcements. However, prior research indicates that households tend not to incorporate changes in monetary policy into their decisions (Lamla and Vongradov, 2019; Journal of Monetary Economics). This oversight diminishes the effect of new monetary policy strategies and creates inefficiencies in markets.

Fed’s Expected Policy Change: Over the past two years, the Fed has effectively utilized the base policy rate to control inflation. This "hawkish" approach resulted in interest rates rising from the 0.25%-0.50% range to a 5.25%-5.50% interval. Nonetheless, monetary tightening comes at a cost. High interest rates suppress consumer spending and decelerate the economy, posing a potential risk of recession. They also increase the treasury's debt service burden. Financial forecasters anticipate that maintaining excessively high base rates could lead to a "hard landing," i.e., a recession. Conversely, financial analysts believe that the Fed should begin lowering rates this year to ensure a "soft landing." Some also speculate that the election year might pressure the Fed to initiate quantitative easing (QE).

The hawkish monetary policy has significantly impacted the housing market as well. The average mortgage rate reached about 8% in October 2023, creating a challenging environment for both buyers and sellers and particularly limiting the supply of inventory. Homeowners are postponing the listing of their properties due to the limited demand. Analysts predict that the housing market will recover, and homeowners will be more inclined to list their properties once the Fed begins to lower the rates.

Six or three cuts? In the last early-January meeting, the Fed signaled that it would consider rate cuts. However, contrary to the market expectations, the Fed’s announcement hinted at three cuts (i.e., around 75 or 100 bps reduction). Analysts believe that the Fed will eventually “capitulate” and implement six cuts (i.e., about 125 or 150 bps reduction). Some think that six cuts will turbo-charge the economy and will help the incumbent in the presidential elections. The Fed’s March 20 meeting will determine which monetary policy scenario is in play. A policy rate cut in March will be indicative of a 125 or 150 bps reduction in base rate by the end of 2024. As of January 17th, the market predicts with ~56% probability that the Fed will cut the rate in March.

The Effect of QE on Housing Markets: Anticipated reductions in the policy rate are likely to decrease mortgage rates, stimulating demand for housing inventory. Nonetheless, the resultant change in price dynamics will hinge on the speed at which supply responds. With companies increasingly reverting to in-person work, employees working in hybrid or remote modes are being required to return to major metropolitan areas. This shift to in-person work could bolster inventory in the housing market. However, as mortgage rates fall, previously priced-out buyers may re-enter the market, potentially leading to robust demand. Consequently, net housing prices may rise or fall across different regional markets, contingent upon the supply-demand equilibrium.

Research Questions:
1. To what extent are homeowners aware of and responsive to the Fed's monetary policy announcements? Do potential rate cuts by the Fed influence homeowners' market expectations?
2. The economic news landscape presents both positive (home prices will increase) and negative (home prices will decrease) scenarios for homeowners. How does the tone of an economic news piece influence their willingness to list properties?
3. What is the "diffusion rate" of the Fed's policy announcements? Will homeowners adjust to base rate reductions as the market anticipates?

Intervention Start Date
Intervention End Date

Primary Outcomes

Primary Outcomes (end points)
beliefs, entropy
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
we incentivize housing market price movement beliefs
Experimental Design Details
Not available
Randomization Method
by computer
Randomization Unit
Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters
Sample size: planned number of observations
Sample size (or number of clusters) by treatment arms
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Institutional Review Boards (IRBs)

IRB Name
Auburn University
IRB Approval Date
IRB Approval Number
#23-662 EX 2401