Conclusion:
● Home values do not coorelate with rising or falling mortgage rates.
Data Summary:
From 1975 - 2005, in quarters when average mortgage rates fell, home inflation averaged 1.48%
From 1975 - 2005, in quarters when average mortgage rates rose, home inflation averaged 1.50%
Analysis:
This topic was requested by a subscriber. The following graph shows that home values inflated while
mortgage rates rose from 1978 until 1982.  Home values inflated while mortgage rates fell from 1982 -
2004. The  Home Price Index (HPI) is not available prior to 1975. It is well known however, that home
inflation was in effect well before 1975. Home values seem to rise whether mortgage rates rise or fall.

The calculations and the graph merely indicate that the direction of mortgage rates have not correlated
with home inflation.
If you are considering a purchase or sale of a home, it doesn't appear that the
direction of mortgage rates will affect the price.
Home Price Index (HPI):
The home inflation figures are derived from the HPI. The HPI is "designed to capture changes in the
value of single-family homes in the U.S" and is published by the Office of Federal Housing Enterprise
Oversight (OFHEO). "
The HPI is a weighted repeat sales index, meaning that it measures
average price changes in repeat sales or refinancings on the same properties.
This
information is obtained by reviewing repeat mortgage transactions on single-family properties whose
mortgages have been purchased or securitized by Fannie Mae or Freddie Mac since January 1975."
See http://www.ofheo.gov/index.asp for more information.
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House Price Index (HPI)
30 Year Mortgage Rate
Relative Performance of the 30 Year Mortgage Rate and Home Values
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12/30/05