I’m teaching a course entitled “The Financial System”, and as part of revising the course, I’m looking at trouble spots. Bill McBride at CR posted this interesting map:
House prices have been declining since early 2025; contra Bessent, high interest rates are not strongly correlated with real rates (but are more correlated with high measured policy uncertainty).
Figure 1: Case-Shiller National House Price Index (blue, left log scale), TIPS 10yr, % (tan, right scale). Source: S&P, Treasury via FRED.
Contrast with EPU:
Figure 2: Case-Shiller National House Price Index (blue, left log scale), Economic Policy Uncertainty, legacy version (red, right scale). Source: S&P, policyuncertainty.com via FRED.
As CR notes:
While overall negative equity rates remain low, certain markets are showing signs of concern, particularly in the Gulf Coast of Florida and Austin, Texas.
So, maybe I don’t need to panic yet…
