Housing Continues To Hold Back Economy

Washington, DC, Feb. 13, 2012 -- Continuing problems in the housing market are holding back the economic recovery and blunting the effectiveness of Federal Reserve policies, Fed Chairman Ben Bernanke said Friday.

"The economic recovery has been disappointing in part because U.S. housing markets remain out of balance," Bernanke said.

Bernanke noted that even creditworthy households find it difficult to obtain mortgages or refinancing, depite record low interest rates.

Bernanke said that home prices are down 40% nationally from their peak, after adjusting for inflation, which has resulted in more than $7 trillion in lost household wealth.

"It appears the recent declines in housing wealth may be reducing consumer spending between $200 billion and $375 billion per year," he said. "That reduction corresponds to lower living standards for many Americans."