Home prices have posted steady gains since 2012, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index, but that run-up could soon come to an end once the Federal Reserve stops its rate-hiking cycle. U.S. home prices rose 0.7% from April to May at a seasonally adjusted rate to a new record high.
After the Federal Reserve's consecutive monthly rate hikes meant to cool a red-hot post-pandemic market, Robert Shiller, professor of economics at Yale University, says that a soft landing is a likely possibility in the months to come, CNBC reports.
“The fear of interest rate increases has influenced people’s thinking — it’s not just the homeowners, it’s new buyers who wanted to get in before the interest rates went up even more,” Shiller recently told CNBC’s “Squawk Box Asia.”
“They wanted to lock in. So that’s been a positive influence on the market. But it’s coming to an end,” he added.
“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,” the professor said, adding that a soft landing is a possibility, though it’s unlikely to be a “perfect” one.
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