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Yale's Shiller: The Fiscal Cliff Could Hurt Confidence

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    Case-Shiller Index co-author Robert Shiller weighs in on home prices.

  • Duration 3:05
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At Fox Business.

Home prices -- -- some -- -- listen up home prices in twenty major US cities rising more than expected.

In June for May at according to the latest S&P case Shiller home price index the next also showing a gain of half of a percent.

From June of 2011 the first year over year increase since September 2010.

Robert Shiller is -- co author.

That's and a professor of economics at Yale University he's with us from.

New Haven, Connecticut so we saw a blip back in 2010 but do you believe from here on out we will have a sustained increase in home prices.

Well this is different from the Tony can -- -- is that one was connected to the home buyer tax credit.

This time it's it's happening without best special government intervention.

-- -- -- looks more optimistic I think it's too soon to call a bottom but it might well be I think some people be kicking themselves navy.

That they didn't buy now but I just can't be sure that's the problem this too many -- on the horizon.

Name one cloud -- one that I know that you pay attention to I was looking at the latest reading on consumer confidence.

And it came in this morning but well below expectations.

And I think it was -- sixty point six Bob.

Does that worry you because that's the kind of thing that feeds on itself.

That's right it's not just the general public opinion that the Philadelphia.

Federal reserve bank of Philadelphia's survey of professional forecasters.

Has shown -- pronounced weakening in their outlook over the last three months.

Unemployment rate is up you know and people see a lot of things to worry about so that that is it drag that might prevent this home price.

Recovery from continuing what's the biggest worry for years looking out just the next six months something that other people might not be thinking about that they should.

Well I think the fiscal cliff.

-- I don't know how that will play out.

But if there's a lot of argument in the inability of congress to do some thing.

It can't hurt confidence that the same thing -- -- when Leah threatened to default on the national debt that was a big hit to confidence.

And you think interest rates wolf decidedly.

Head higher from here or are we Japan.

And we can't wait to buy a home ten years from now.

Well.

Interest rates have been declining.

For thirty years now and think they're getting -- inflation index yields -- some of them are negative.

They can't keep going down and look what's happening next I don't know but yet and that's brother is two things happening that look good for housing it's that.

This sudden start of an increase in home prices and remember home prices are not a random walk.

They have momentum and the other thing is from record low interest rates that average mortgage rate now is 3.5 5%.

So you know it's tempting to go into the housing market now.

More than attempting Bob thank you for being here is -- Neela vale is Robert Shiller take care establish -- -- --

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