Former Federal Reserve Chairman Alan Greenspan said on Tuesday that the seeds of a bottoming in plunging U.S. home markets were becoming visible.

Speaking to a National Association of Realtors summit, Greenspan said there were reasons to believe that bulging inventories of unsold homes were dwindling and that should bring some stability to prices.

It looks to me, judging from the balancing of household formation on one hand, conversions, mergers, demolitions...that we're at the edge of a major liquidation in that excess of inventories which I suspect and I hope will be of such a pace that it will stabilize prices, the former Fed chief said.

So as I look at the housing market...we are finally beginning to see the seeds of a bottoming, he added.

Greenspan noted that in areas where the housing slump was steepest, like California, Nevada, Arizona and central Florida, sales appeared to be picking up even if prices are not yet showing the same rebound.

(Reporting by Nancy Waitz, writing by Glenn Somerville, editing by Leslie Adler)

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