With 30-year mortgage rates back above 7%, the S&P 500 has crushed U.S. home-price gains over the past decade, and younger buyers locked out of housing are renting and putting money into stocks instead.
Fortune reported that from an investing view, U.S. homes have lagged far behind the stock market in recent years, and mortgage rates above 7% are likely to widen that gap further.
From December 2015 through December 2025, the Case-Shiller Index of home prices rose 87%. Over the same stretch, the S&P 500 soared 235%, not counting dividends that would lift stock returns even more.
That mismatch is not ancient history. In 2026 so far, nationwide home prices are up only 1.5% on the latest Case-Shiller reading, while the S&P 500 is up 13%.
The housing market has stayed largely frozen since the COVID-era boom ended in 2022. The Federal Reserve launched an aggressive rate-hiking campaign to rein in inflation, and it is tightening policy again.
Average 30-year fixed mortgage rates have moved back above 7%. For many would-be buyers, especially younger Americans shut out of the market, the practical choice has been to rent and invest in stocks.
An artificial-intelligence boom powered equities higher. The S&P 500’s streak of double-digit annual gains has not been seen since the late 1990s.
That run has not been a straight line. Fortune noted that an Iran war and fears of an AI bust sent stocks on a wild ride during 2026. Even so, the index still sits well ahead of home prices on both the long and short windows cited.
Homeownership still carries real advantages the raw index comparison does not capture. A house is a place to live as well as an asset. The U.S. tax code also includes benefits for owners.
Leverage can magnify gains on the housing side. Economists have pointed out that a 20% down payment on a house that rises 10% in value can mean a 50% return on the buyer’s initial equity. That math helps explain why many families still treat a mortgage as a wealth engine when prices move.
But price gains alone have not kept up with broad stock returns over the past decade. When financing costs jump above 7%, the monthly payment hurdle rises and the rent-versus-buy math gets harder for households that cannot put more cash down.
Boston University economist Ray Fisman and Carnegie Mellon University economist Michael Luca laid out the trade-offs in a Wall Street Journal op-ed published the week before the Fortune analysis.
Fisman and Luca wrote:
"The rent-versus-buy decision involves real trade-offs that too often go unrecognized, especially by those who can comfortably afford to buy,"
They added that a purchase ties together choices most people treat as one:
"Buying a home also bundles two very important, but very different, decisions: where to live, and how to invest a large chunk of your life savings."
On pure investment performance, their verdict was blunt. They said “the returns to buying can be, well, meh.”
That line lands harder when set beside the 2015, 2025 scoreboard. An 87% rise in the Case-Shiller home-price index is solid on its face. A 235% rise in the S&P 500 over the same period, before dividends, is in another league.
Since 2022, the combination of higher Fed rates and a stalled housing market has kept many owners from listing and many shoppers from closing. Rates above 7% raise the cost of every new loan and every refinance that never happens.
Younger Americans locked out of purchase prices and payment math have responded in a straightforward way: rent the roof, and put investable cash into equities that have outrun home values.
That pattern does not erase the non-financial value of owning a home. Stability, control over a residence, and the tax treatment of ownership still matter. Fisman and Luca themselves noted the comparison is not a clean apples-to-apples contest, because a house delivers shelter along with any price gain.
It does force a clearer look at the investment half of the deal. When the stock index more than triples the home-price gain across a full decade, and then leads again in the following year, the old assumption that a house is always the superior long-term asset deserves scrutiny.
Fed policy sits at the center of the rate story. Officials hiked aggressively to cool inflation after the pandemic-era surge, and they are tightening again. Mortgage rates followed that path back above 7%, and transaction activity did not snap back to boom conditions.
Strip away the slogans and the numbers are plain. Case-Shiller home prices: +87% from December 2015 through December 2025. S&P 500: +235% over the same span, excluding dividends. In 2026 to date: homes +1.5%, stocks +13%.
Mortgage rates above 7% raise the bar for new buyers. A frozen post-2022 market limits supply and mobility. An AI-driven equity run, even with geopolitical and bust fears along the way, has kept the index far ahead of house-price indexes.
Households that can still buy may do so for the roof, the schools, the neighborhood, and the tax treatment, not because the last decade of price data proves housing beat the market. Households that cannot buy have already voted with their leases and their brokerage accounts.
Fisman and Luca’s warning stands: too many buyers still treat location and life savings as a single decision. The return gap of the past ten years shows why separating those choices matters.
When easy money gives way to an inflation fight, and homeownership freezes under 7% mortgages, families who keep saving in productive assets still have a path to build wealth, housing policy and rate shocks do not erase the market’s long scoreboard.