Title: US Home Prices Could Stagnate as Fed Rate Hikes Come to an End, warns Yale Professor
Subtitle: Renowned economist Robert Shiller predicts a potential end to the decade-long rise in US home prices
Date: [Insert Date]
The prolonged surge in US home prices may soon face a significant hurdle as the Federal Reserve concludes its rate-raising cycle, according to economist and Yale University professor Robert Shiller. Known for predicting the housing bubble in 2008, Shiller cautions that the end of the Fed’s tightening measures could dampen the upward trajectory of home prices in the country.
Since 2012, the S&P CoreLogic Case-Shiller National Home Price Index has reported consistent growth in home prices. However, Shiller now suggests that anxieties surrounding rising interest rates have shaped buyer behavior, with homeowners and potential buyers rushing to the market before rates escalate further. In an interview with CNBC news, he emphasized that this trend is likely to fade away as the Fed’s rate-raising cycle nears its end.
Shiller highlighted the past six months as a period of “unusual behavior” for the housing market, as prices displayed momentary stability before resuming their upward climb. He underscored the fact that interest rates have increased dramatically in recent years and that some market participants feel that enough tightening has been done.
Despite these concerns, the economist does not view the recent surge in home prices with panic. Shiller believes that part of the increase is seasonal, as prices generally tend to rise during the summer months. He remains cautious about the market, however, suggesting that the era of consistent growth in housing prices may be approaching an end due to the interest rate cycle.
While Shiller does not anticipate a housing market crash like that of 2008, he suggests that an adjustment in prices could be on the horizon. According to the Case-Shiller National Home Price Index, home prices have risen by 43% over the past decade, a trend that may experience a decline later in the year as the housing market enters the slower fall and winter months.
Looking ahead, the actions of the Federal Reserve will likely play a crucial role in shaping the housing market. During its June meeting, the Fed maintained interest rates at 5%-5.25%, signaling a slower pace of rate hikes than in previous years. The central bank stated that future rate adjustments would depend on factors such as inflation, economic strength, and employment data. With two more rate hikes potentially on the horizon, the market awaits the Fed’s next meeting scheduled for July.
Economists concur with Shiller’s prediction, as a group of 106 economists surveyed by Reuters expect the Fed to raise interest rates again in the near future. The overall sentiment suggests that the rate hikes paired with other economic indicators will have a significant impact on the housing market.
As the US housing market stands at a pivotal juncture, homeowners and potential buyers should closely monitor the Federal Reserve’s decisions, as they will likely shape the trajectory of home prices in the months to come.
Note: The news article is based on existing content and is not real-time news.