Mortgage rates have dropped so much this year - falling about one-third of a percentage point -- that the low levels could "stimulate" the housing market, Nobel Prize-winning economist and home-price expert Robert Shiller said Tuesday.

"These declines matter," Shiller said in a CNBC interview. "People are watching mortgage rates."

The average rate for a 30-year fixed rate mortgage hit 4.14% for the week that ended May 22, the lowest rate since October and down from 4.53% at start of 2014, according to federally controlled mortgage-finance giant Freddie Mac.bgChannel, .bgRealtimeChannel, .bgRevision { display: none; }/quotes/zigman/226335/delayed /quotes/nls/fmcc FMCC .

"That's getting back down there and that might stimulate the market," Shiller said.

Meanwhile, the average rate for a 15-year fixed-rate mortgage hit 3.25% in most recently weekly data, also the lowest since October, down from 3.55% at the start of this year.

Shiller's remarks echo comments earlier this year from Federal Reserve Chairwoman Janet Yellen, who said that low mortgage rates should "should serve as a stimulus to people coming back into the housing market."

Unfortunately, buyers faced a double whammy to affordability over the past year. Mortgage rates started rising in May 2013 as the market speculated about when the Federal Reserve would start pulling back on its massive asset-purchase program that exerted downward pressure on long-term rates. At the same time, builders and home owners cranked up asking prices, enabled by a low number of homes on the market.

As a result, recent home-sale readings are trailing year-earlier results. But sales conditions are improving. Mortgage rates dropped this year on a string of weak economic reports. A combination of lower mortgage rates, slower price growth and an improving economy may lead to faster home sales this year.

-Ruth Mantell