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Though overpriced, stocks still attractive: Robert Shiller

Though the stock market is "overpriced," it's still probably "not a bad investment, all things considered," Nobel-winning economist Robert Shiller told CNBC on Tuesday.

To Shiller, a professor of economics at Yale University, the housing market might provide a decent return on investment, too.

"If it doesn't go down, [housing] might be a good investment. We're living in a world of disappointing investments, so absolutely," Shiller said on "Squawk on the Street." "But I say the same thing about the stock market, you know, I think it's overpriced. It's not a bad investment, all things considered."

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Equity prices have reached lofty levels as investors overreact to mounting geopolitical tensions, among other concerns, Shiller said.

"You might think the stock market should go down when people are anxious. But people are anxious now because of the international situation … and they're anxious now because inequality is getting worse. People are worried about being replaced by a computer," Shiller said. "All these things are on people's mind and it creates kind of a desire to save more … and they bid up the prices of everything."

Robert Shiller
Petras Malukas | AFP | Getty Images
Robert Shiller

Separately, U.S. single-family home prices rose in July on a year-over-year basis but fell short of expectations, a closely watched survey said on Tuesday.

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The S&P/Case Shiller composite index of 20 metropolitan areas gained 6.7 percent in July year over year, shy of expectations for a 7.5 percent rise.

On a seasonally adjusted monthly basis, prices in the 20 cities fell 0.5 percent in July. A Reuters poll of economists had forecast a flat reading.

Nonseasonally adjusted prices rose 0.6 percent in the 20 cities on a monthly basis, disappointing expectations for a 1.1 percent rise.

"The broad-based deceleration in home prices continued in the most recent data," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement. "While the year-over-year figures are trending downward, home prices are still rising month-to-month although at a slower rate than what we are used to seeing over the past couple of years."

House for sale existing home sales
Daniel Acker | Bloomberg | Getty Images

A broader measure of national housing market activity that S&P/Case-Shiller is now releasing on a monthly basis rose at a slower pace year over year, coming in at 5.6 percent.

"We've seen three consecutive months now of declines in the seasonally adjusted number," Shiller, the index's co-founder and namesake, told CNBC. "They're actually going down. It's something like 6 percent a year."

The seasonally adjusted 10-city gauge fell 0.5 percent in July versus a 0.2 percent decline in June, while the nonadjusted 10-city index rose 0.6 percent in July compared with a 1.0 percent rise in June. Year over year, the 10-city gauge also rose 6.7 percent.

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Shiller added that both pending and existing home sales have been on a down curve for much of the year. "So there is sign of some weakening."

By Reuters. CNBC's Drew Sandholm contributed to this article.