S&P 500 / Home Prices
Selected range · January 1953 — April 2026
About this chart
The S&P 500-to-Home-Prices Ratio compares the level of the U.S. stock market with the level of U.S. residential property prices.
The numerator is the monthly S&P 500 index level. The denominator is a national U.S. home-price index from Robert Shiller’s historical housing dataset.
The ratio provides a long-term comparison between large U.S. public companies and residential real estate.
The ratio rises when the S&P 500 increases faster than home prices. It can also rise when home prices weaken while the stock market remains stable or declines more slowly.
A higher ratio means that U.S. equities are relatively strong compared with national home prices. This may occur during periods of strong corporate earnings, expanding equity valuations, technological growth, greater investor preference for liquid financial assets, or weaker housing-market performance.
The ratio falls when home prices increase faster than the S&P 500 or when equities weaken relative to housing.
A lower ratio means that national home prices are relatively strong compared with U.S. equities. This may occur during periods of strong housing demand, constrained housing supply, easier mortgage conditions, weaker stock markets, or declining equity valuations.
The S&P 500 component is an index level rather than the dollar value of the entire stock market. The home-price component is also an index rather than the dollar price of an average house.
The absolute ratio therefore does not show how many homes can be purchased with an investment in the S&P 500. Its purpose is to measure how the relationship between the two indices has changed over time.
The chart compares the S&P 500-to-Home-Prices Ratio with an estimated long-term exponential trend.
A deviation of 0% means that the ratio is equal to its estimated trend.
A positive deviation means that the S&P 500 is relatively stronger than home prices compared with the model’s long-term trend.
A negative deviation means that home prices are relatively stronger than the S&P 500 compared with the model’s long-term trend.
The standard-deviation zones show whether the current deviation is relatively common or historically unusual. Values farther above or below 0% represent less common historical relationships between equities and residential property prices.
The ratio can provide long-term context about the relative performance of financial assets and housing. It should not be interpreted as a direct measure of housing affordability, a literal stock-to-property purchasing-power ratio, or a market-timing signal.
Limitations
- Both inputs are indices rather than directly comparable dollar asset values, so the ratio does not show how many homes an equity investment could purchase.
- The S&P 500 input excludes reinvested dividends, while the home-price index excludes rental income, property expenses, transaction costs, and financing costs.
- The model therefore does not compare the total returns of equities and residential real estate.
- A national home-price index can conceal substantial differences across regions, cities, and property types and generally adjusts more slowly than stock-market prices.
- The exponential trend and standard-deviation zones depend on the selected sample period and regression specification.
- Structural changes in mortgage finance, housing supply, demographics, taxation, and the composition of the S&P 500 may alter the relationship over time.
- An unusually high or low reading can persist and should not be interpreted as a housing-affordability measure, a precise valuation estimate, or a market-timing signal.
Methodology
The S&P 500-to-Home-Prices Ratio is calculated by dividing the monthly S&P 500 index level by the monthly U.S. home-price index.
The model applies a natural logarithm to the S&P 500-to-Home-Prices Ratio and fits the logged values to a linear monthly time trend. The fitted log values are converted back into normal ratio values using the exponential function. This produces the model’s long-term exponential trend. The percentage deviation measures how far each ratio observation is above or below the corresponding trend value. The standard deviation of the full historical percentage-deviation series is used to create the ±1σ, ±2σ and ±3σ zones around 0%. The z-score divides the current percentage deviation by that standard deviation, expressing the current observation in standardized historical units. Both the S&P 500 input and the home-price input are indices, not dollar amounts. The model uses monthly observations beginning in January 1953 and continues through April 2026 in the current workbook.
Data sources
Monthly U.S. stock-market index level used as the equity component of the ratio
Range: January 1953 to the latest available observation used by the model
Source: DataHub, Standard and Poor’s 500 Index Data; https://datahub.io/core/s-and-p-500
Monthly U.S. national home-price index
Range: January 1953 to the latest available observation used by the model
Source: Robert J. Shiller, U.S. Home Prices historical data; https://shillerdata.com/