Real estate is closely related to industry. The continuous rises of house price adversely affect the industrial output mainly in three aspects: rise of labor cost, occupying of fund and increase of speculation. Under different levels of industrialization, there are threshold effects and regional differences. Based on the panel data of 31 provinces (cities) from 2003 to 2017, the GMM system is used to verify the above assumptions. The results show that the impact of house price increase has changed from promoting the industrial output into restraining it. From the regional perspective, influenced by the industrial development level and macro environment, the impact of house price increase on industrial output is more significant in central region than in western area. The influence is insignificant in western region for its low house price. Under different levels of industrialization, there is a threshold for the impact of rising house prices on industrial output.