"In real terms, home prices have never been so high. My data goes back over 100 years, so this is something," Nobel prize-winning economist Robert Shiller told CNBC's "Trading Nation." 

Shiller is the co-founder of the S&P CoreLogic Case-Shiller home price index. He is worried about a housing bubble forming where the "Wild West" mentality pushes prices higher. He also is concerned about stocks and cryptocurrencies.

"I don't think that the whole thing is explained by central bank policy. There is something about the sociology of markets that are happening," he said. 

Shiller has noticed that housing starts drive home prices. But last week, despite a shortage of homes and buildable property, home builders are easing production, paralyzed by surging commodity prices. 

In April, single-family housing starts plunged 13% compared with March. This was the sharpest downward move since last April when the pandemic began. Despite Shiller's euphoric housing bubble warning, the latest data shows an emerging pattern in housing starts that is quite ominous from the past. 

However, Shiller points out there's "a lot of upward momentum in housing markets and prices may not come down in a year." He believes the current housing market environment is similar to 2003, five years before the housing market crash in 2008. 

"If you go out three or five years, I could imagine they'd [prices] be substantially lower than they are now, and maybe that's a good thing," he added. "Not from the standpoint of a homeowner, but it's from the standpoint of a prospective homeowner. It's a good thing. If we have more houses, we're better off."

Meanwhile, on an intermediate basis, Glenn Kelman, CEO at Redfin, told Bloomberg last week that housing prices are set to cool. He said the housing market is in a frenzy, with most houses selling above the asking prices, which has never happened before. 

After record gains in the first quarter, some home prices may stall. 

According to the National Association of Realtors, nationwide, the median existing-home sales price rose 16.2% in the first quarter to $319,200, a record high in data going back to 1989.

According to the Case-Shiller Home Price Index, we recently reported that home sales prices in the country's hottest markets had risen by their highest level since 2006. The index showed home prices in 20 major cities are up a shocking 11.10% year-over-year.

But outside the major metro markets, demand was even more robust, translating into the most significant YoY increase in median sales since 2006.

Kelman warned: "I think you're going to see a little bit of air come out of the ballon," referring to the housing market bubble the Federal Reserve engineered by sending mortgage rates to record lows at the start of the virus pandemic in 2020. 

Shiller's and Kelman's warning comes as home-buying sentiment has collapsed to its weakest since 1983.

Between Shiller and Kelman, both believe housing prices are in a frenzy. However, Kelman's view is that housing prices will cool on an intermediate timeframe, and Shiller is on a multi-year view. The broad consensus is that today's environment is not sustainable. But as we all know, the Fed can sometimes maintain bubbles for quite some time. 

And who may deflate today's housing bubble? Well, the Fed, of course, which has been hinting about tapering of bond purchases.