Former Federal Reserve Chairman Alan Greenspan said Thursday the U.S. economy was pulling away from the shoals of a sharp housing-sector downturn and that the outlook for growth was "reasonably good."

"Most of the negatives in housing are probably behind us," Greenspan said at a conference sponsored by the Commercial Finance Association "The fourth quarter should be reasonably good, certainly better than the third quarter."

The government reports on third-quarter economic growth on Friday. After shooting ahead at a 5.6 percent annual clip at the start of the year, the economy advanced only 2.6 percent in the second quarter as home building took a dive.

Economists polled by Reuters expect the government report on third-quarter gross domestic product to show growth slowing further to a 2.2 percent pace.

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However, many analysts think growth may revive in the current quarter as lower energy prices buoy consumers.

"There are early signs of stabilization," Greenspan said of the U.S. housing market, although he added: "It's not over."

"The evidence is that we're beginning to see a flattening in statistics for sales of new homes," he continued. "The rate of construction is well below the rate of purchases."

Greenspan, who retired from the Fed in January after more than 18 years at its helm, said the U.S. was "beginning to dig into the inventories of unsold new homes."

Copyright Reuters 2006.

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