The housing market is slowing down after torrid gains through much of last year, says Nobel laureate economist Robert Shiller of Yale University.
Indeed, the S&P/Case-Shiller home price index for 20 cities (named after him) rose 13.2 percent in the year through January, That's the smallest gain since August, and it's down from 13.4 percent in the year through December.
Meanwhile, investors such as Blackstone have been curtailing their purchases of houses. Originally these investors were likely attracted by the upward momentum in the housing market since spring 2012 — momentum that was much stronger than in the stock market,
Shiller tells CNBC.
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"The way prices have been increasing since the spring of 2012, it looked like a no-brainer to get into the market for a while," he asserts. "But now there are signs of softening. I can imagine people there are starting to doubt that this momentum is going to continue."
A number of indicators, including permits, starts and traffic, show weakness in the housing market, Shiller notes.
"Another thing, I think this boom we saw in home prices had something to do with quantitative easing and record-low mortgage rates, which are now history."
However, Shiller says housing prices could rise again. "The futures market at the CME [Chicago Mercantile Exchange] is predicting something like 25 percent higher home prices in 2018. That seems like a possibility," he maintains.
Some experts are still optimistic about the housing market. "There's a big upside to new home sales," Robert Dye, chief economist at Comerica, tells
Bloomberg.
"We have a huge amount of pent-up demand and very tight inventories. Mortgage rates, although they've risen, are still very low. We expect to see continuing improvement in the housing market."
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