High U.S. home inventories a major concern: Greenspan
TOKYO (Reuters) – Former Federal Reserve Chairman Alan Greenspan said on Tuesday that falling U.S. home prices and high inventories of unsold properties presented a major risk to the U.S. economy and financial markets.
Greenspan said he was not “sanguine” about the how quickly the glut of unsold homes could be reduced.
“We still need to accelerate the rate of inventory liquidation, and that will mean bringing housing starts down and sales up. We have a long way to go,” said Greenspan, who was answering questions at a CEO conference in Tokyo via video link from Washington.
“The critical issue on the whole subprime, and by extension the whole financial system, rests very narrowly on getting rid of probably 200,000-300,000 excess units in inventories in the United States,” he said.