Home Prices and the Stock Market

Posted in Real Estate, Strategic Allocation


Homes typically represent a substantial fraction of investor wealth. Are there reliable relationships between U.S. home prices and the U.S. stock market? For example, does a rising stock market stimulate home prices? Do falling home prices point to offsetting liquidation of equity positions. Do homes effectively diversify equity holdings? Using monthly levels of the non-seasonally adjusted S&P Case-Shiller U.S. National Home Price Index (Home Price Index) and the S&P 500 Index during January 1975 through June 2015 (about 41 years), and annual median sales prices for existing homes from RealEstateABC.com and the National Association of Realtors spanning 1968 through 2014 (47 years), we find that: (more…)

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