U.S. Home Prices May Stabilize in 2008

Alan Greenspan the former Chairman of the Federal Reserve has said that he believes that the fall in US house prices will most likely to stop by then end of 2008 due to the reduction in the pool of houses on the market, which in turn could help an economic resurgence.

Although predictions indicate that this will not happen until early 2009, most of the house inventory will be sold which will help to stabilize prices, although the average price of a single family home has fallen by 8.7 percent from a year ago.

Although the actual extent of the damage caused by the sub-prime mortgage crisis is yet to be fully accounted for, asset markets will not fully recover until the housing prices do stabilize.

A slow and hesitant recovery is predicted once the markets do real that point, although it is important to consider the fact that the Us housing market is also tied into the broader financial markets as they in turn rely on the sales of mortgages as securities.

Greenspan did predict that it is also fairly likely that there is going to be a very high rate of liquidation in the final quarter of 2008.

Due to the slowdown of the economy, a major outbreak of inflation is highly unlikely although it is predicted that once the point of stabilization is reached then inflationary pressures would begin to take hold as the economy does begin to pick up.

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