From Federal Reserve Chairman Ben Bernanke:
The adjustment in the housing sector is still ongoing, and the slowdown in residential construction now appears likely to remain a drag on economic growth for somewhat longer than previously expectedwhich translates to interest rates remaining the same for now. Home prices will continue to decline, and almost no one will be buying new construction. From here it looks more and more like sub-prime loans were the fuels for realtors, builders and mortgage brokers to keep their maturing markets artificially stoked. Earlier in the week, Floyd Norris talked about a long housing downturn followed by a recession. Whoopee.
· Bernanke Predicts Moderate Growth [New York Times]
· The Long Life Span of a Housing Downturn [Floyd Norris/NY Times via Matrix]