- A decade-long rally in US home prices could finally come to an end once the Federal Reserve halts its rate-hike cycle, said Robert Shiller, a professor of economics at Yale University.
- Home prices have risen steadily since 2012, according to the S&P Case-Shiller US National Home Price Index.
- “Fear of rate hikes has swayed people’s thinking — it’s not just homeowners, it’s new buyers who wanted to get in before interest rates went any higher,” Shiller said.
“Fear of rate hikes has swayed people’s thinking — it’s not just homeowners, it’s new buyers who wanted to get in before interest rates go up any further,” said Robert Shiller, professor of economics at Yale University.
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A decade-long rally in US home prices could finally come to an end once the Federal Reserve halts its rate-hike cycle, said Robert Shiller, a professor of economics at Yale University.
Home prices have risen steadily since 2012, according to the S&P Case-Shiller US National Home Price Index.
“Fear of rate hikes has swayed people’s thinking — it’s not just homeowners, it’s new buyers who wanted to get in before interest rates went any higher,” Shiller said.
“They wanted to participate. So that had a positive impact on the market. But it’s coming to an end,” he added.
Noting that the index reflected “unusual behavior” over the past six months, Shiller said prices “seemed fine, and then they started to go up.”
According to data from another benchmark, the Black Knight Home Price Index, US home prices hit a record high in May and are up a seasonally adjusted 0.7% nationwide from April.
“I think … people don’t know what to do with the question ‘What is the Fed going to do?’ should hold. situation,” Shiller said.
The Fed indicated at its June meeting that further tightening was likely, albeit at a slower pace than the rate hikes that have characterized monetary policy since early 2022.
“We have seen interest rates rise dramatically for a couple of years. And I think there’s a feeling that that’s enough,” the professor said, adding that a soft landing is possible, although unlikely to be “perfect.”
However, Shiller added that he was “not panicking” and said some of the recent rise in house prices was “seasonal only”, noting that prices typically rise in the summer.
The Fed meeting is scheduled for Wednesday. Economists polled by Portal forecast interest rates rising by 25 basis points.