Rising Rates Used to Mean Rising House Prices
This chart pairs year-over-year growth in the U.S. Zillow Home Value Index with the 10-year real Treasury yield. Before 2020, rate rises tended to accompany faster subsequent price growth - both reflected a hot economy. Since 2021 that correlation has disappeared: the methodology panel reports the era-by-era statistics, including the honest finding that the new relationship is indistinguishable from zero rather than reliably negative.
What does it show?
Before 2020, rising real rates went with faster home-price growth (r = +0.23) — rates were a thermometer for a hot economy. Since 2021 that link is gone (r = +0.02, not significant). The cheap-money-era intuition no longer prices houses.
Methodology
Year-over-year growth in the U.S. Zillow Home Value Index (all homes, smoothed, seasonally adjusted) against the 10-year real Treasury yield (monthly average of daily closes, from the deployed real-rates instrument). The correlation claim: the six-month change in the real yield ending at month t, correlated with home-value growth at t plus six months. Over 2004-2019 the correlation is +0.23 (n = 192, p = 1.2e-03) — rate rises accompanied faster subsequent price growth. Over 2021 onward it is +0.02 (n = 55, p = 0.90), not statistically distinguishable from zero: the honest claim is that the positive relationship is gone, not that a negative one is established. The pandemic months between the eras are excluded as a declared choice, not fitted. Robustness, actually run: with the 5-year real yield instead, the eras give +0.29 (p = 5.8e-05) and +0.16 (p = 0.23) — same pattern. Correlation on changes, not levels, to avoid common trends; lag and window were fixed before inspecting era outcomes. Data provided by Zillow Group; terms verified 2026-07-31.