Let me guess - you’re running Plasma/SDDM?
If so, ~/.Xauthority isn’t used any more. That’s why it’s not recreated when you delete it. Instead of ~/.Xauthority, it’s now /tmp/xauth_xxxxx (the xxxxx will be a unique identifier).
See here:
This commit moves Xauthority handling over to libXau…However, we lose the ability to merge the new cookie into an existing Xauthority file, so support for using a non-temporary file is dropped.