by Calculated Risk on 7/02/2008 12:13:00 PM

"The ... slow recovery of financial markets that I think is likely suggests that the U.S. economy will be subject to substantial headwinds for some time."

From Fed Governor Frederic Mishkin: Global Financial Turmoil and the World Economy. Here are some excerpts on housing:

Different measures tell somewhat different stories, but it seems clear that U.S. home prices began decelerating a while back and have been posting outright declines in recent quarters. Mortgage defaults and foreclosures are at record highs and delinquency rates are at their highest level in 29 years, which could keep downward pressure on prices for some time to come.

An adverse feedback loop has emerged in the housing sector, as severe difficulties in the mortgage markets have significantly limited the availability of mortgage finance for many borrowers. The lack of mortgage credit, in turn, appears to have further driven down home sales and contributed to the decline in house prices. However, some of the slowdown in mortgage lending has been warranted.
emphasis added