Jeremy Siegel warns home prices are about to suffer their 2nd-worst crash since World War II amid Fed rate hikes

• Jeremy Siegel warned home prices will post the second-worst crash since World War II in the next 12 months.
• He told CNBC that the Federal Reserve's aggressive tightening is hitting rate-sensitive sectors of the economy.

Wharton professor Jeremy Seigel warned that home prices are about to experience their second-worst drop since World War II as the Federal Reserve continues to raise rates.

He told CNBC on Monday that the Fed's aggressive tightening campaign is already hitting rate-sensitive sectors of the economy, adding that fears that the central bank will keep rates "higher for longer" are spooking markets.

"I think we're gonna have the second-biggest housing price decline since post WWII period over the next 12 months," Siegel said. "That's a very, very significant factor for wealth [and] for equity in the housing market."

He said last week that home prices will decline by as much as 15% as Fed rate hikes send mortgage rates higher. The 30-year fixed rate is now back above 7% by some measures, hitting the highest levels since 2007.

On Tuesday, the National Association of Home Builders said its market index fell 8 points to 38 in October, just half of what it was six months ago.

Markets widely expect the Fed to increase rates by 75 basis points at its November and December meetings, following three consecutive hikes of that size already.

On Monday, Siegel said the Fed has to "slow down and wait and see what the tightening has already wrought on the economy."

He also said he would support an additional 50-basis-point hike from the Fed if it were then followed by a pause in tightening.

"I wouldn't even mind a stop because I think if they wait, they will see how inflation has come down," he said.