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Yale economist Robert ShillerDouglas Healey

U.S. home prices rose an impressive 13.4 per cent in December, year-over-year, but Yale economist Robert Shiller isn't exactly bubbling with excitement over the housing market's recovery.

During a conference call following the release of the S&P/Case Shiller home price index, Mr. Shiller – who helped create the index and is one of the top authorities on the health of the market – sounded concerned that home prices aren't recovering much after taking inflation into account.

The numbers back him up: Though prices rose strongly year-over-year, December's pace was down from November's 13.7 per cent year-over-year increase. And on a month-over-month basis, prices actually declined slightly in December.

But Mr. Shiller goes beyond these headline figures to focus on other trends that make the market look anything but ebullient. The traffic of prospective home buyers, as tracked by The National Association of Home Builders, and building permits of single family homes, are both slowing down after the strong recoveries post 2012.

"This is concerning," he said. "I don't make too much of it yet."

Next, he looked at expectations among home buyers – specifically, a survey that he has created with Karl Case, asking recent home buyers in four cities to predict home price increases over the next 10 years. As you might imagine, expectations were very high during the real estate boom years that prices would rise impressively – 12 per cent a year for 10 years.

Since the bubble burst, enthusiasm has been trending steadily downward, to a low of about 3 per cent today, or lower than the mortgage rate. "This is a somewhat troubling factor," he said. "We're just losing our general sense of optimism about housing, and it is slowly percolating through the population."

In September, Mr. Shiller addressed concerns that house prices could be rising too rapidly, after a 16-month increase rivalled the sort of price gains seen during the crazier months of the housing bubble in 2004. No, real estate was not forming another bubble just yet, he concluded, but he wasn't ready to dismiss the idea that one could be in the works.

Now Mr. Shiller appears more focused on the downside. "Could this be a major turning point, like 2006?" he asked. "Well, it doesn't seem like we're in the same circumstance as 2006 because we're just not in the aftermath of such a big bubble."

But nor does that mean a smooth recovery.