"Housing at this stage as you know is moving nowhere," he said.
The former Fed leader, who opposed excessive financial regulation as a central banker, said the best thing U.S. policy makers can do is refrain from interventions that prevent markets from settling to a proper balance.
"Allow markets to heal," he said. "Markets have been consistently bombarded with all sorts of policy decisions," which "has clearly prevented markets from adjusting."
Treasury 10-year yields rose from almost the lowest level in three months after the Institute for Supply Management said its factory index climbed to 54.8 last month, exceeding the most optimistic forecast in a Bloomberg survey, from 53.4 in March. Readings greater than 50 signal growth.
The 10-year yield rose three basis points, or 0.03 percentage point, to 1.95 percent, according to Bloomberg Bond Trader pricing. It touched 1.90 percent before the manufacturing report.
The former central banker's comments on equities haven't always been timely. In 1996, Greenspan said the stock market may reflect "irrational exuberance" when the Dow Jones Industrial Average was above 6400. The index peaked at over 11,700 in January 2000, before technology stocks slumped.