STEVE INSKEEP, host:
And next let's look for some signs of life in the housing market. Here's NPR's Chris Arnold.
CHRIS ARNOLD: It's a chilly winter day in Boston, but the housing market here is definitely thawing.
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Songwriter Jonathan Downing is playing the piano in his dining room. Bright morning sunlight comes in through the bay window. Downing's surrounded by unpacked boxes. He and his wife just bought this house a couple of weeks ago.
Mr. JONATHAN DOWNING (Songwriter): (Singing) Everything (unintelligible) I promise, (unintelligible) without a dime. Everything will be clear...
ARNOLD: Downing and his wife Tiffany moved here after he got into Boston's Berklee School of Music. So they were scrambling a bit to find a place to buy, and I think they got a good deal on it: $250,000. It definitely needs some work, but it's in a decent area. There's a big pond and nice parks nearby. And the couple has already replastered and repainted the first floor.
Ms. TIFFANY SEWELL: You own the place and it's yours and you love it and paint it. You make it your own by putting hard work into it.
Mr. DOWNING: It was just amazing, whatever you want to call it, divine intervention or...
Mr. JOHN BRISTOL (Realtor): Great realtor.
Ms. SEWELL: John, John.
ARNOLD: That's John Bristol, the realtor who helped the couple to find this house. He says lately we've had record low interest rates, lower prices, and a first-time homebuyer tax credit. Also, there's a sense that the economy isn't headed for complete Armageddon. And Bristol says all of that together is attracting more buyers.
Mr. BRISTOL: And I think it'll be like that - next year it'll be a buyers' market. As long as the interest rates stay where they're at, which some areas they're under 5 percent.
ARNOLD: Nationally, existing single-family home sales rose nearly 20 percent over just the past couple of months. But prices in most places are not going up. In part, that's because of a glut of foreclosures that keeps putting downward pressure on prices. This house is actually an example: A previous owner was headed for foreclosure and the bank agreed to let the house go for less than that person owed on it.
Also, unemployment is still very high. So Bristol doesn't expect prices to start rising anytime soon.
Mr. BRISTOL: We still have a long ways to go. And I hate - I'm going to say three to five years before we start seeing some good appreciation.
Mr. PATRICK NEWPORT (Housing Economist, IHS Global Insight): I just don't see prices bottoming out simply because the foreclosure problem is so serious.
ARNOLD: Patrick Newport is a housing economist with IHS Global Insight.
Mr. NEWPORT: The rest of the economy is starting to grow. I think we'll start seeing job growth next year. The foreclosure problem is getting worse. We just don't have a good handle on how high foreclosure rates will go. They could go quite a bit higher from what they are right now.
ARNOLD: On a brighter note, economists are hoping to see some improvement when it comes to home building. After the housing bubble burst, homebuilding all but ground to a halt. The country has lost hundreds of thousands of residential construction-related jobs. Mark Zandi is chief economist of Moody's Economy.com.
Mr. MARK ZANDI (Chief Economist, Moody's Economy.com): The level of construction is extraordinarily low. It's about as low as it has been since World War II.
ARNOLD: Zandi says builders have pulled back so much that even if the housing market remains a bit anemic, homebuilding is likely to pick up in 2010.
Mr. ZANDI: A big change, and a very important one, housing construction will go from being a very significant weight on the economy to being a small positive. And that's very key to ensuring that the economic recovery continues on and ultimately evolves into an expansion.
ARNOLD: In other words, more homes getting built next year could mean more construction jobs, more orders for windows and doors, refrigerators � everything that goes along with a new home. The National Association of Home Builders is predicting a 35 percent increase in 2010.
Mr. ZANDI: I think there's now increasing reasons to be optimistic about both the housing market and for the broader economy.
ARNOLD: Still, Zandi agrees that unemployments and the foreclosure crisis will continue to slow down the housing market's recovery. He'd like to see some more improvements to the latest government efforts to prevent foreclosures.
And there are some other wild cards such as what will happen when the government starts to wind down the emergency measures it's been undertaking to keep interest rates low and make mortgages more available.
Chris Arnold, NPR News, Boston.
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