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Issue 1 · Late October 2026
Fed funds rate → US house prices
Common explanation (Direct mechanism · opposite direction): Rate rises make mortgages dearer, and house prices then weaken.
This issue: Fed funds rate at 72 (warm), US house prices at 59 (neutral) — at least one is in the neutral range (40–60), so we make no call this issue.
Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.
Hover over a pendulum or tick to see its name; click to open that indicator.Tap a pendulum or tick to see its name; tap again to open that indicator.
Where it stands now
Where the two indicators stand this issue
Fed funds rate: 72 (1.31 percentage points above its 10-year average). US house prices: 59 (31.0% above its 10-year average, about as far above as usual).
Tests
Does this link hold up?
Common explanationRate rises make mortgages dearer, and house prices then weakenSource: International Monetary Fund, “The Housing Supply Channel of Monetary Policy” (2024). The article measures the rate shock with the 1-year Treasury yield, not the Fed funds rate itself, and uses the Case-Shiller index for national house prices; this site uses FHFA.
Tested against our dataBy position (each compared with its own normal — do their highs and lows move together?): agreement between Fed funds rate and US house prices (12-month lag) is −0.71 (an opposite-direction link: the raw correlation is +0.71, and a negative correlation fits, so the sign is flipped); across every 5-year period (shifted one year at a time), the two moved in that direction in 4 of 11; data start only in 2009.By change (how far each position moved over the past 12 months — do their swings move together?): agreement +0.36; the two moved in that direction in all 10, but that does not mean they always will.
By position4/11
By change10/10
2009–20142019–2024
Each cell is a five-year period (shifted one year at a time): filled = in step with the common explanation, outlined = out of step.○○○Not visible, or the opposite
Periods when it did not holdAcross the 5-year periods (shifted one year at a time, so they overlap), the periods out of step cover — by position (11 periods): 2009–2020; by change (10 periods): none.
Does it predict?Prediction test (a historical test, unrelated to “Where it stands now” above and not this site’s forecast): does adding the past 12 months of Fed funds rate make US house prices easier to predict? Result: Some sign, but fails the hurdles (p = 0.016; the smaller, the less likely by chance). Forecasting a recent stretch of data not used for estimation, the error is 5.6% higher.●○○Some sign
History
The two lines, overlaid
Data: Federal Reserve H.15, via FRED (Federal Reserve Bank of St. Louis); US Federal Housing Finance Agency (FHFA), purchase-only house price index (seasonally adjusted), via FRED (St. Louis Fed); public domain. Positions: our calculation.
Fed funds rateUS house prices
Limits
What this card cannot tell you
Moving together does not prove that one causes the other.
Results for every period are listed in full, including periods that did not agree.