Smaller tax refunds a headwind for house prices

Tax returns processed so far indicate households are set for smaller refunds this year. For most, the drop in expected income will not be enough to derail plans to buy a home. But, to the extent refunds are used to bolster down payments, leverage effects mean even a small drop will hit buyers’ purchasing power. That will provide another headwind to house price growth, which will to slow to 2% this year.