Homes typically represent a substantial fraction of investor wealth, often leveraged via mortgages. 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 homes diversify stocks? To investigate, we consider the following inputs:
- Monthly levels of the non-seasonally adjusted S&P/Case-Shiller U.S. National Home Price Index (Home Price Index) during January 1987 through December 2025, with release lag about three months.
- Annual median sales prices for existing homes during 1963 through 2025, as assembled by Claude (with guidance).
- Annual median sales prices for new homes during 1963 through 2025.
Using these sources, monthly levels of the S&P 500 Index (SP500) and yields on 3-month and 1-year U.S. Treasury bills (T-bills) for Sharpe ratio calculations during January 1963 through February 2026, we find that:
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