ROBERT SIEGEL, HOST:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
MELISSA BLOCK, HOST:
And I'm Melissa Block.
When the president delivers his annual State of the Union Address tomorrow, the economy will of course be a top issue and housing is still at the heart of the country's economic woes. The Federal Reserve said this month that the crash in home prices has cost $7 trillion in household wealth, and that means people and businesses are spending a lot less. NPR's Chris Arnold reports.
CHRIS ARNOLD, BYLINE: The state of the housing market is definitely not strong. On the campaign trail in Florida today, Republican Mitt Romney offered this assessment.
MITT ROMNEY REPUBLICAN, PRESIDENTIAL CANDIDATE: It doesn't have to be like this. It can get better. It will get better.
ARNOLD: Romney and his fellow Republican candidates haven't offered many specifics about how housing will get better or when.
CANDIDATE: I can't predict when it's going to get better other than if I'm fortunate enough to become president, I will care very deeply about getting it better in a big hurry.
ARNOLD: But it is at least possible now to take a glass half-full view of things. Mark Zandi is chief economist at Moody's Analytics. He's been tracking the housing market closely and advising policymakers in Washington.
DR. MARK ZANDI: Well, the six-yearlong housing crash is coming to an end. It's not quite over. I think we've got a bit more to go with respect to house price declines. But for the first time since late 2005, '06, I think the trend lines look actually quite good for housing.
ARNOLD: Zandi says the pace of home sales is picking up. That, though, does not mean that lots of average Americans are jumping back in, getting loans, buying houses and brimming with confidence. The fact is that many of those sales are actually investors using cash to buy foreclosed properties. That might not sound so good, but Zandi says he likes to see that.
ZANDI: Yeah. Investors are probably about a third of the existing home market right now, a very important part of the market which is very encouraging. They sense value. The prices have now fallen enough that investors can come in, scarf up these properties, rent cover their costs and hold on. These aren't flippers. They're looking out three, five years.
ARNOLD: Still, it's likely to be two or three years before housing starts to look really healthy again. For now, we're still at the bottom of the cliff. And from that perspective, things are so bad that housing economists Patrick Newport and Erik Johnson felt the need to title a recent report on housing in Latin.
PATRICK NEWPORT: I'll let Erik pronounce it because he has five years of Latin, and I don't.
ERIK JOHNSON: Six years, actually. Well, for the housing sector 2011 turned out to be an Annus Horribilus, just a horrible year for housing.
ARNOLD: If you look at home construction, the numbers are striking. Newport and Johnson are with IHS Global Insight. They say that the past three years have been the worst since before record keeping began.
JOHNSON: The lowest level since World War II.
ARNOLD: And that's not adjusted for population, so we're actually building fewer houses in the U.S. than we have in more than 60 years. And that translates into a lot of unemployed or underemployed construction workers. Patrick Newport.
NEWPORT: It's not only that the numbers are low nationally, but they're bad in just about everywhere, in every state in the country.
ARNOLD: One problem is that millions of foreclosed homes keep glutting the market. Meanwhile, foreclosure prevention efforts have been very tangled up. Neil Barofsky served as the special inspector general overseeing the so-called TARP program in Washington.
NEIL BAROFSKY: I think unfortunately, we've seen remarkably little progress since where we were a year ago.
ARNOLD: President Obama's foreclosure prevention plan is called HAMP, and it was supposed to help three to four million homeowners. But so far, it's reached less than a million, and lately, it seems to be slowing down.
BAROFSKY: That's a correct characterization. If anything, the HAMP program has gone from an anemic program to one that is even more mediocre than it was just a few months ago.
ARNOLD: Barofsky blames the banks, and he also blames the Obama administration for not pushing the banks harder.
Still, some economists hold out hope for some new efforts to help housing. One we might see in the next year aims to take foreclosed homes and convert them into rental properties on a large scale. Chris Arnold, NPR News