The Federal Reserve should not be focusing as much on housing as a measure of the health of the overall economy, former Fed Gov. Kevin Warsh told CNBC on Tuesday.
"Housing and housing assets are going to give you one signal," Warsh said in a "Squawk Box" interview. "[But] there is a broader cross section of data from the consumer, from the business, from trade and from exports. So this preoccupation with housing strikes me as really quite dangerous."
One of the goals of the Fed's $85 billion in monthly purchases of bonds and mortgage-backed securities, known as quantitative easing, has been to support the budding recovery in the housing market—the crash of which led to the 2008 financial crisis.
(Read more: US home prices up the highest since 2006: Survey)
Investors have been hanging on every word out of the Fed for clues on when policymakers might start to scale back QE. Wall Street had widely expected tapering to begin in September, but it didn't materialize. With no changes in October, attention has turned to next month's meeting of the central bank.
"My sense is now as we get to the end of this year, early next year, QE has gotten a little tired in that room," the former Fed governor said. In a world according to Warsh, he said he'd make it clear that QE is "on a path to extinction." He explained that he'd lay out a committed course for winding down asset purchases from $85 billion a month to $65 billion to $45 billion and so on, barring "some extraordinary developments in markets."
(Read more: Fed's Lockhart: No taper until we're ready)