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10 years of rising US housing prices may come to an end, says Robert Shiller




  • A decade-long rally in U.S. home prices may finally end as the Federal Reserve halts its rate-hiking cycle, said Robert Shiller, 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.
  • “The fear of rate hikes has affected people’s thinking — it’s not just the homeowners, it’s new buyers who wanted to get in before interest rates went up even more,”[ads1]; Shiller said.

– The fear of interest rate increases has affected people’s thinking – it’s not just the homeowners, it’s new buyers who wanted to get in before interest rates went up even more, says Robert Shiller, professor of economics at Yale University.

Bloomberg | Bloomberg | Getty Images

A decade-long rally in U.S. home prices may finally end as the Federal Reserve halts its rate-hiking cycle, said Robert Shiller, 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.

“The fear of rate hikes has affected people’s thinking — it’s not just the homeowners, it’s new buyers who wanted to get in before interest rates went up even more,” Shiller said.

“They wanted to lock in. So it’s been a positive influence on the market. But it’s coming to an end,” he added.

Shiller noted that the index reflected “unusual behavior” over the past six months, saying prices “seemed to be fine, and then it started going up.”

U.S. home prices hit a record high in May, rising 0.7% nationally from April at a seasonally adjusted rate, according to data from another benchmark, the Black Knight Home Price Index.

“I think … people don’t know what to do with the ‘what’s the Fed going to do?'” situation, Shiller said.

The Fed indicated at its June meeting that further tightening is likely, but at a slower pace than the interest rate increases that have characterized monetary policy since early 2022.

“We’ve seen a dramatic rise in interest rates since a couple of years ago. And I think there’s a sense that it’s enough,” the professor said, adding that a soft landing is a possibility, though hardly a “perfect” one.

However, Shiller added that he is “not panicking,” saying that part of the recent rise in home prices is “just seasonal,” noting that prices typically go up in the summer.

The Fed will meet on Wednesday. Economists polled by Reuters predict a rate hike of 25 basis points.



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