The landmark $25 billion settlement reached by the federal government, 49 states and the nation’s five biggest banks will provide long-overdue relief for hundreds of thousands of homeowners who have been struggling to navigate the mortgage mess created by lenders.

The wider impact for most homeowners, along with the housing market and economy, will be much more limited.

“You’re hardly skimming the surface,” said Paul Dales, a housing economist with Capital Economics. “It could help some people a lot, individually. But in terms of the big-picture, overall economy and housing market, it’s really just a drop in the ocean of the problem.”

The housing market ended the year on a positive note with strong sales in December, but a glut of unsold homes will likely push prices lower through much of this year, forecasters said Friday.

Sales of existing homes hit an 11-month high last month and the number of properties on the market fell to the lowest level in nearly seven years, according to the National Association of Realtors.

Unseasonably warm weather may have helped boost sales, but analysts said a strengthening job market and record low mortgage rates should buoy housing in coming months. Still, they were troubled by the high level of “distressed homes” for sale, including short sales of underwater properties or sales of foreclosed properties. Nearly one-third of existing-home sales were distressed last month, according to the Realtors.

Devin Datus, 39, and his wife, Michelle, 36, are raising four kids, ages 9 to 18, in Utah on his military salary. His wife is a full-time student and stay-at-home mom.

TODAY.com’s Life Inc. blog asked the couple about their financial situation as part of a series of stories looking at what it’s like to live on the nation’s median income of about $50,000 a year. Here is their response:

What’s it like to live on around $50,000 a year?

NEW YORK (CNNMoney) — Home prices continued to sink in the third quarter, falling to levels not seen since early 2003.

Home prices dropped 3.9% year-over-year during the three months ended Sept. 30, according to the S&P/Case-Shiller national home price index. On a quarterly basis, prices were slightly higher, squeezing out a 0.1% gain.

One bright spot was that the declines have started to slow. During the second quarter, prices were down 5.8% year-over-year.

“Any chance for a sustained recovery will probably need a stronger economy,” said David Blitzer, a spokesman for S&P.

WASHINGTON — Americans spent in September at three times the pace of the previous month, even though their incomes barely budged. They financed their spending binges by saving at the lowest level since the start of the Great Recession.

Consumer spending rose 0.6 percent last month, the Commerce Department said Friday. The gain was driven by a big rise in purchases of durable goods, such as autos.

Consumers earned only 0.1 percent more after their income fell by the same amount in August. And after adjusting for inflation, their after-tax incomes fell 0.1 percent last month — the third straight monthly decline.

As a result, they saved less. The savings rate fell to 3.6 percent, the lowest level since December 2007.

Expectations were high after the government said Thursday that consumer spending helped fuel annual growth of 2.5 percent in the July-September quarter, the best quarterly expansion in a year.

First, Congress and President Obama can adopt strategies designed to unleash the massive amount of capital that is accumulated but not being invested. There’s some $2.2 trillion in cash in American banks that is not committed to loans. A couple hundred billion has to be held back for bad mortgages, but there’s about $2 trillion that could be used in cash reserves for up to $20 trillion in loans. So, in theory, that would take the world out of recession. And U.S. corporations have about $2 trillion more that they have decided not to invest.

NEW YORK — Hurricane Irene sent east coast shoppers into stores to stock up on essentials this week, instead of the clothes, notebooks and other supplies that retailers were counting on selling as parents prepare to send their children back to school.

Chains such as Home Depot Inc and Wal-Mart Stores Inc were doing brisk business on Friday, selling water, flashlights, batteries and other goods in states standing in Irene’s potential track from the Carolinas to Massachusetts.

“Most probably, the biggest demand right now is for generators, obviously,” said Suzanne Roche, manager of a Sears store in Wilmington, North Carolina. “We have got customers calling nonstop about the generators.”

Full Story at Home Depot, others get boost from Irene – Business – Retail – msnbc.com

Home Depot, Walmart, grocers get boost from Irene

NEW YORK — Paper and pens are just the beginning of back-to-school expenses for a growing number of families. State and local governments are cutting back, leading more public school
districts to charge kids to compete in sports or play in the band. Such
fees, commonly known as “pay-to-participate” or “pay-to-play” cropped
up in the 1980s.

You might be tempted to believe that after four years of brutal declines in home prices, the worst of the crisis is over. The Standard & Poor’s/Case-Shiller 20-city index of prices has fallen back to where it was in 2003. Housing prices in Phoenix are at 2000 levels, and Las Vegas is revisiting 1999. Lower prices have made homes more affordable than they’ve been in a generation, and sales have gone up in six of the past nine months. “It’s very unlikely that we will see a significant further decline” in prices, Housing and Urban Development Secretary Shaun Donovan said in a July 3 appearance on CNN. “The real question is, when will we start to see sustainable increases? Some think it will be as early as the end of this summer or this fall.”

For 28-year-old Ikenna Njoku, what should have been the simple act of cashing a check turned into four days in jail and the loss of his car and job.

A year ago Njoku, a construction worker, had just purchased his first home and qualified for a federal rebate for first-time home buyers on his tax return.

NEW YORK (CNNMoney) — A dismal jobs report defied Wall Street’s expectations Friday.

But considering the beating consumers have taken recently, why was anyone surprised?

The American consumer is now feeling the cost of $4 gas and higher food prices, seeing their wages rise very little and still being held back by declining home values, which recently fell to their lowest level in nine years.

NEW YORK (CNNMoney) — After record job losses, falling home prices and devalued investment portfolios, the recession has taken a toll on many Americans’ financial well being. But retirees and those close to retirement, with little time left to rebuild their savings, face particular hardship.

One in four Americans age 50 or older said they had exhausted all of their savings during the recession, while 67% at least reduced their retirement savings account balances during the previous three years, according to a report by the AARP Public Policy Institute released Tuesday.