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Greenspan Says U.S. Home Prices May Stabilize in 2008 Scott Lanman and Lily Nonomiya Former Federal Reserve Chairman Alan Greenspan said the drop in U.S. home prices will probably end ``well before'' early next year as the number of houses on the market diminishes, aiding an economic rebound. ``It will not be until early 2009 that we will get close to having eliminated most of this'' home inventory, Greenspan told a conference in Tokyo today sponsored by Deutsche Bank AG and co-hosted by Bloomberg LP. ``But it is very likely that home prices will stabilize well before that.'' Greenspan added that the extent of damage stemming from the collapse of the subprime-mortgage market won't be known for months. He described the credit crisis as the worst in 50 years, echoing the assessment of International Monetary Fund economists.
``You won't see asset markets recover until housing prices stabilize,'' said Glenn Maguire, chief Asia-Pacific economist for Societe Generale SA in Hong Kong. ``If Greenspan is correct, you'll see weakness in the economy through 2008.'' The yield on the 10-year Treasury note fell 1 basis point to 3.53 percent as of 4 p.m. in Tokyo, according to bond broker Cantor Fitzgerald LP. Greenspan's successor, Ben S. Bernanke, and other Fed officials have highlighted declining home prices as a major economic risk that may further hurt household wealth and consumer spending. `Slow, Hesitant Recovery' ``Once the markets start to stabilize, especially if the real economies don't go into a severe recession,'' then ``we can expect a recovery to begin to take place,'' Greenspan, 82, said via satellite from Washington. ``It will be slow, it will be hesitant.'' The health of the U.S. housing market is tied to broader financial markets that rely on bundling mortgages to sell as securities, Greenspan said. The median price of an existing single-family home dropped 8.7 percent in February from a year earlier, the most in four decades of record keeping, according to the Chicago-based National Association of Realtors.
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