Friday, April 08, 2005

US not facing national housing "bubble" - Greenspan

(Updates with quotes on housing and energy)

WASHINGTON, April 8 (Reuters) - Most U.S. homeowners do not need to fear an abrupt collapse in home prices despite sharp increases in recent years, Federal Reserve Chairman Alan Greenspan said in a letter released on Friday.

"For the nation as a whole, I do not believe that a 'bubble' has developed, but the extraordinary gains in some local markets may not be sustainable," Greenspan said in written responses dated April 6 to questions raised by Sen. Jim Bunning, a Kentucky Republican, at a Feb. 16 Senate Banking Committee hearing.

Greenspan noted the "housing market is quite strong at the moment, buoyed by mortgage interest rates that are still low by historical standards and solid growth in real disposable income."

U.S. futures prices also indicate that oil prices will decline over the next year, "but only to a level of around $50 per barrel for West Intermediate crude oil," he said.

However, recent prices increases "are likely to be passed on to consumers and business in form of higher prices for gasoline and heating oil."


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