Former Federal Reserve chairman Alan Greenspan said the U.S. housing market will begin to recover in the first half of 2009, according to an article he wrote for Emerging Markets magazine published on Friday.

“The recent slowing in the rate of decline in U.S. home prices is the first positive note in this now yearlong trauma,” Greenspan wrote in the article for Emerging Markets, a publication issued for this weekend’s Group of Seven and International Monetary Fund meetings in Washington.

“More conclusive signs of pending home price stability are likely to become visible in the first half of 2009,” he wrote.

The credit-market freeze will eventually thaw as “frightened investors take tentative steps towards re-engagement with risk,” the former Fed chairman said, without specifying a time frame. He praised the actions of governments in buying up toxic assets and recapitalizing banks.

Iceland’s government seized the island’s top three banks this week after the banking system imploded. The U.K. government agreed to invest 50 billion pounds ($87 billion) Oct. 8 to boost capital in the nation’s banks to unlock credit markets.

Article courtesy of Bloomberg.com.