Renowned economist and Yale University professor, Robert Shiller, has predicted that the decade-long surge in U.S. home prices might be approaching a turning point once the Federal Reserve concludes its rate hiking cycle.
“We’ve seen a dramatic increase in interest rates since a couple of years ago. And I think there’s a sense that that’s enough,” CNBC quoted the professor as saying.
The S&P Case-Shiller U.S. National Home Price Index has shown consistent growth in home prices since 2012, partly fueled by the fear of rising interest rates, with both existing homeowners and new buyers eager to secure lower rates before further increases.
However, Shiller observed “unusual behavior” in the index during the last six months, where the upward trend seemed to intensify. Despite this, Shiller refrains from panicking, attributing some of the recent price spikes to seasonal factors, as the housing market typically experiences a surge during the summer.
Professor Shiller hopefully stated that a “soft landing is a possibility”, though it’s unlikely to be a “perfect” one.
The Federal Reserve, which signaled a slower pace of tightening in its June meeting, is set to meet again on Wednesday with economists predicting a 25 basis point interest rate hike.