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…