WASHINGTON — Federal Reserve Board Chairman Ben Bernanke said Thursday that the housing market is "far from being out of the woods," despite initial signs pointing to a recovery.

With construction activity, sales, and home prices still well below pre-crisis levels, a revival of U.S. housing sector "still faces significant challenges and the benefits remain quite uneven," the Fed chairman said in a speech to the Operation HOPE Global Financial Dignity Summit in Atlanta.

In recent months, the housing market has shown signs of improvement as national home prices have lifted for the last nine consecutive months. Sales of both new and existing home sales have also risen, while homebuilder sentiment has improved substantially. Even real estate agents have reported a rise in homebuyer traffic.

Demand for homes has also increased, given historically low interest rates on 30-year mortgages and lower home prices, Berannke said, following several rounds of quantitative easing taken by the Federal Open Market Committee to help lower long-term interest rates.

Still, other data points demonstrate headwinds are still derailing a full recovery, Bernanke said.

Foreclosures have dropped off since their peak in 2010, yet there are still 2 million families close to losing their homes, three times the historic norm. National homeownership is also at a 15-year low, having slipped nearly four percentage points since its height in 2004.

"Although there are good reasons to be encouraged by the recent direction of the housing market, we should not be satisfied with the progress we have seen so far," said Bernanke. "Strengthening and broadening the housing recovery remain a critical challenge for policymakers, lenders, and community leaders."

The impact of such crises often erodes the progress achieved especially by low-income and minority communities' ability to purchase homes, the Fed chairman said.

Nationally, the pace of residential lending has fallen by more than half from 2006 to 2011 for first-lien mortgages. It is at its lowest level since 1995.

For minority groups and those families with lower incomes, the number of loans extended to African Americans and Hispanics to buy a home has fallen more than 65%. Lending to non-Hispanic whites has fallen by a smaller margin of less than 50%. The same can be seen for lower-income neighborhoods where home-purchase loans have fallen by about 75%.

"Unemployment, income loss, and income insecurity prevent many households from purchasing homes, and concerns about the future direction of the labor market, housing prices, and the economy more generally keep other potential buyers on the sidelines," said Bernanke.

While part of the reason for the decline in mortgage lending has been a reluctance by qualified potential buyers to purchase home, tight credit standards continues to remain a factor.

The Fed's latest quarterly Senior Loan Officer Opinion Survey, which is meant to update policymakers about lending conditions, showed that banks have continued to keep their mortgage credit standards tight since 2007.

Bankers have been less inclined to approve a government-insured mortgage for less than creditworthy borrowers due to concerns about higher risk of put-backs of delinquent mortgages, among other factors.

Another drawback, Bernanke said, has been the over-correction by lenders to greatly improve their underwriting standards for their residential loans, which had been lax in the lead up to the financial crisis.

"It seems likely at this point that the pendulum has swung too far the other way, and that overly tight lending standards may now be preventing creditworthy borrowers from buying homes, thereby slowing the revival in housing and impeding the economic recovery," said Bernanke.

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