"I still believe there is a greater than 50 percent probability of recession," Greenspan told The Financial Times. "But, that probability has receded a little and I think the probability of a severe recession has come down markedly."
Greenspan told the Times that house prices could experience another 10 percent decline before reaching bottom.
"Such house price declines imply a major contraction in the level of equity in owner-occupied homes, the ultimate collateral for mortgage-backed securities," he said.
Greenspan also outlined the risk of increased household savings, the Times reported.
Increased savings would have a negative impact on spending, which would slow the economy further.