Global Courant
“The fear of interest 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 further,” said Robert Shiller, a 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 stops its cycle of rate hikes, said Robert Shiller, an economics professor at Yale University.
House prices have been made steady profit since 2012according to the S&P Case-Shiller US National Home Price Index.
“The fear of interest 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 further,” Shiller said.
“They wanted to get involved. So that’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 started to rise.”
According to data from another benchmark, the Black Knight Home Price Index, US home prices hit an all-time high in May and rose 0.7% nationally from April at a seasonally adjusted rate.
“I think … people don’t know what to think about ‘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 rate hikes that have characterized monetary policy since early 2022.
“Since a few years ago, we’ve seen a dramatic rise in interest rates. And I think there’s a sense that that’s enough,” the professor said, adding that a soft landing is a possibility, although unlikely to be a “perfect” landing.
However, Shiller added that he is “not panicking”, saying that some of the recent rise in house prices is “only seasonal”, noting that prices tend to rise in the summer.
The Fed meets on Wednesday. Economists polled by Reuters predicts a rate hike of 25 basis points.
