Tags: Shiller | Housing | Prices | homes

Yale’s Shiller: Housing Prices May Finally Be Bottoming Out

Thursday, 08 March 2012 11:29 AM

The housing market may finally be bottoming out, says Robert Shiller, Yale economist and co-founder of the Case/Shiller Housing Index.

Housing prices are very momentum-driven, meaning when they rise, they rise for a while and when the fall, the downturn lasts for a while.

The housing boom and subsequent bust has sent the market into unchartered territory, Shiller says, but it appears that finally, the market is bottoming out.

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"It could turn around, you know. It's been going a long time," Shiller tells CNBC.

"We're seeing some good news now. Starts, permits, confidence, the NAHB housing index is strikingly up, though it's still low, but it's up. So it could turn around."

Confidence on the National Association of Home Builder's (NAHB) monthly sentiment index jumped 4 points to 29 in February, its highest level in four years (50 sets the line between positive and negative sentiment), CNBC adds.

The index gauges buyer traffic, current sales, and sales expectation.

"Housing is very affordable. Interest rates are down, prices are down to kind of a normal level. They haven't overshot normal. So maybe in terms of housing, this is it," Shiller says.

Homeowners recently received a politically-charged shot in the arm from the White House.

President Barack Obama has said the government will cut fees on government-backed mortgages to help millions of homeowners refinance, part of an election-year strategy to firm up the weak U.S. housing market.

The move should free up homeowners financially, which would benefit the overall economy, says Jaret Seiberg, senior policy analyst with Guggenheim Securities.

"This should be broadly positive for housing and the economy by reducing foreclosures and freeing up income for consumers to spend on other goods and services," Seiberg writes in a note to Guggenheim clients, according to Reuters.

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