ICS Magazine

Greenspan: Housing bubble unlikely in United States

July 17, 2002
WASHINGTON, July 17 (Reuters) - Federal Reserve Chairman Alan Greenspan said on Wednesday the rise in consumer debt largely reflected an increase in home ownership and home values, and that the Fed saw no sign of a bubble developing in housing.

"We've looked at the bubble question and we've concluded that it is most unlikely," Greenspan said in response to a question before the House Financial Services Committee. He said the diversity of housing markets in the United States and the high transaction costs involved in selling a home -- including the need to move -- made a bubble developing "most unlikely."

Asked about a drop in consumer confidence found in a recent survey, Greenspan said the Fed watched what consumers did rather than what they said, and that surveys did not necessarily indicate how consumers were going to behave.