Economists like Yale’s Robert Shiller have no better word to describe the outlook for the U.S. housing market than “uncertain,” stressing that patterns of the past aren’t shedding any light on future prices amid stubbornly weak demand for homes.

“In 2005, we had a peak in home sales and then we saw a catastrophic drop in volume. It’s very strange by historical standards,” Robert Shiller, professor of economics at Yale University, said in a conference call following the release of the June S&P/Case Shiller Home Price report on Aug. 31.

On the surface, home price gains across the country seem positive—the latest S&P/Case Shiller Home Price report showed a continuation of a subtle uptrend through the month of June. But viewed in a longer historical context, they haven’t recovered as strongly as they have in the past, putting an “abrupt end to the bubble-and-burst pattern” the housing market has seen since data were first gathered.

Economists like Shiller have a few preliminary ideas about what’s going on. Apart from the weak job market hurting housing demand—another 54,000 jobs were lost in the U.S. in August, pushing the unemployment rate to 9.6 percent—they also point to a drop in immigration related to the Sept. 11 terror attacks and the issues on the U.S.-Mexican border; people leaving the U.S. for job reasons; and college graduates living with their parents instead of striking out on their own.

All in all, professional forecasters are expecting home prices to remain relatively flat for the time being, somewhere between precredit-crisis levels and the most recent 2009 lows, said Shiller, who is also chief economist at MacroMarkets, the firm behind the MacroShares line of exchange-traded products.

“It’s a puzzle what’s coming ahead. These are exceptionally uncertain times.”

Production, Demand, Jobs

It’s tempting to conclude that there's pent-up demand lurking behind data showing historically low levels of new-home construction, especially at a time when prices are relatively cheap and interest rates are so low.

But there’s that problem of weak demand Shiller’s concerned about, which could have more to do with totally different data points, notably “household formation,” an economist’s way of describing what happens when people marry, have children and buy homes.

Quantifying household formation is no easy job, according to Karl Case, professor of economics at Wellesley College and founding partner of Fiserv Case Shiller Weiss, Inc., the firm behind the Case/Shiller housing survey.

“I’m worried that the 2010 Census will show we have fewer [household formations] than we think we have,” Case said, in the same conference. “Vacancy rates are high and they don’t seem to be budging despite the low production levels.”

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