The housing market is beginning to stabilize, and the recession should end later this year, Federal Reserve Chairman Ben Bernanke told Congress this week. However, Bernanke said this will happen only if the financial system continues to gradually improve and doesn’t relapse into a credit squeeze.

The slight improvement with the housing market is the first to be seen in three years. Bernanke said that sales of resale homes are stable, and sales of new homes have recently increased, though both still remain at depressed levels. According to Bernanke, the affordability of homes is the most steadying factor.

Though the housing market is looking up and Bernanke hypothesizes that the recession’s end is in sight, he said that growth will remain slow and unemployment high for a year after the recession ends.

"We continue to expect economic activity to bottom out, then to turn up later this year," Bernanke told the congressional Joint Economic Committee.

According to an article from the UK’s Guardian, Stephen Stanley, an economist at RBS Securities in Greenwich, Conn., said Bernanke’s comments were "undoubtedly significantly more upbeat than his last congressional appearance in February."

Treasury Secretary Timothy Geithner said Wednesday that none of the 19 largest U.S. banks that were the focus of government "stress tests" are insolvent, Bloomberg reported, and that "the results will be, on balance, reassuring."

Bernanke said the stress tests will give a better idea on exactly where the banks stand, and he said he expects they will raise money from private sources. (Read more of Bernanke’s testimony here.)

Alicia Howe

***

What’s your opinion? Leave your comments below or send a letter to the editor. To contact the writer, click the byline at the top of the story.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription