Robert Shiller

The gains in U.S. home prices in recent months may not be sustainable and increases in some areas of the country appear to be in “bubble territory,” an economist known for his property market expertise said on Tuesday.

Robert Shiller, an economics professor at Yale University and co-developer of Standard and Poor’s S&P/Case-Shiller Home Price Indices, told Reuters Television he does not give quantitative forecasts on where home prices are headed but is concerned about the recent pace of increases.

Home prices in certain areas, such as Minneapolis and San Francisco, have risen by double-digits over a mere four months, and if viewed on an annualized basis, they look like they are in “bubble territory,” Shiller said.

“It is a time of great uncertainty,” he said.

U.S. home prices in August rose for the fourth straight month. The Standard & Poor’s/Case-Shiller composite index of home prices in 20 metropolitan areas rose 1.2 percent in August from July, topping the estimate of a 0.7 percent rise according to in a Reuters poll.

“The prominent fact that we are seeing with this data is that home prices are just zipping up,” Shiller said.

“It is entirely possible that even with the bad news we are getting, home prices could start a major increase,” he said.

Prices in the top 10 U.S. metropolitan areas gained 1.3 percent in August after a 1.7 percent rise the previous month, according to the S&P composite index.

Shiller said he does not agree with analysts who believe that rising unemployment will hurt home prices. The U.S. jobless rate reached a 26-year high of 9.8 percent in September.

“It is unlikely that we will have the major, colossal bubble we had a few years ago, but even in the Great Depression real home prices were rising with the unemployment rate above 12 percent,” he said. “Just because we have high unemployment does not mean the stock market cannot boom and the housing market cannot boom.

“What happens from here will depend on people’s animal spirits and speculative impulses,” Shiller said.

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