Thinking about buying stocks instead of a home as mortgage rates top 7%? The S&P 500 has blown away the housing market over the past decade

From an investing perspective, U.S. homes have paled in comparison to the stock market in recent years, and the surge in mortgage rates will likely widen that mismatch.

The housing market has been largely frozen since the COVID-era boom ended in 2022, when the Federal Reserve embarked on an aggressive rate-hiking campaign to rein in inflation. The Fed is now tightening policy again, and the average 30-year fixed mortgage rate is back above 7%.

At the same time, the AI boom has supercharged stocks, and the S&P 500 has been on a hot streak of double-digit annual gains not seen since the late 1990s.

That’s not lost on younger Americans, who have been shut out of the housing market. They are choosing to rent and investing in stocks to build wealth rather than saving up for a downpayment on a home they may never be able to afford.

Over the past decade, that has worked out well. From December 2015 through December 2025, the Case-Shiller Index of home prices has increased 87%, while the S&P 500 has soared 235%—and that doesn’t include dividends that boost returns even higher.

For Ray Fisman, an economist at Boston University, and........

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