The vice chairman of the Federal Reserve says that talk of the housing bubble bursting is way too pessimistic, reports the Los Angeles Times. In a recent speech Donald Kohn pointed out that mortgage rates have been falling over the last six months and that sales numbers are up in many markets.

In all, Kohn says this is a cyclical correction not a bust. The market was too hot but when all the other economic fundamentals are strong, the market is not in an unstoppable downward spiral. In fact, the central banker sees things evening out as lower prices brings more buyers into the market. And on the most recent numbers, that seems to be happening.

Unlike previous housing downturns, Kohn says mortgage rates have stayed low. In fact, a JP Morgan analyst says that rates could drop to 5.75 percent.  

That’s probably true on a national basis, although the hit in Las Vegas has been bigger because the market raced upwards so quickly over the last two or three years and so has farther to fall. Still, with such a large inventory on the market, it may be that sellers are still confident that buyers will come up to meet their demands and that there will be plenty of buyers. And if you get to the end of the story, you’ll see that the cause of the panic is that we business reporters have been running around, yelling the real estate equivalent of “The sky is falling!” But maybe it isn’t.