Mortgage rates have risen from ultra-low levels in 2012, dampening some buyer interest, Shiller mentioned. The average rate for a 30-year fixed-rate mortgage struck a record low of 3.31 percent in November 2012, and has since raised by over 1 full percentage point, basing on federally controlled mortgage buyer Freddie Mac.
” [Rates] are still low, but I think [the rise] has offset a bit of the wild enthusiasm to purchase a house that a lot of people felt in 2012,” Shiller said.
Also, buyers’ expectations about how much their homes could appreciate has been falling, he added.
“We are just dropping our general way of a positive outlook when it comes to housing,” Shiller said.
Shiller spoke after a Tuesday early morning report showed that the rate of U.S. home-price growth decreased at the end of 2013. U.S. home prices ticked down 0.1 percent in December, going down for a second month, with 11 of 20 tracked cities posting drops, according to S&P / Case-Shiller’s composite index. Shortly after seasonal changes, home prices in December increased 0.8 percent, downward a bit from 0.9 percent in November. Currently, 2013 discovered the fastest price growth for a calendar year since 2005, according to the S&P / Case-Shiller home-price index that tracks 20 cities.
“Home prices will probably go up this year, but not like they’ve been,” Shiller said. “It’s heading to decrease.”.
Home-price growth in 2014 could be slowed by a variety of factors, along with declining affordability hitting demand. If inventories go up as more sellers become willing and able to place their homes on the market, that could cut upward pressure on prices. Slow job growth may also harm demand, as could new mortgage rules for would-be home buyers and lenders.