Although parts of the U.S. economy have shown some signs of recovery, the housing market remains in a slump in some areas. Federal Reserve Chairman Ben Bernanke has a plan to help the housing market. Bernanke’s plan includes modifying more mortgages and making the buying process more streamlined.

Declining home prices: the good and bad

The plan has received criticism from those who don’t believe it will work well for the overall housing market. With high unemployment and recently tighter credit standards, the bottom third of buyers are still unable to apply for mortgages. Even though it’s a buyer’s market and home prices are very low, many are still unable to get a home.

March home prices were at the lowest level since March 2003. With the decline of home prices, many people have decided to keep their current home, which has kept folks from moving to growing areas. Since people are feeling the pinch of the housing market, many consumers are spending less, which accounts for about 70 percent of economic activity.

Fewer first-time buyers

Another hurdle the housing industry is trying to jump over is less first-time buyers. In healthy economic times, first-time home buyers account for more than 50 percent of sales. Currently, the percent of home sales from first-time home buyers is down to about 35 percent, according to Total Mortgage Services. There currently is no program for first time home buyers like there was in 2008, when the First-Time Homebuyer Credit was in effect.

Why are would-be buyers staying away?

With many Americans juggling credit card debt and student loans, the added guidelines of having larger down payments and stricter lending rules are keeping would-be buyers at bay.

HARP qualification, a slow go

There is also the concern of keeping people in the house in which they live. The Obama administration and federal regulators are trying to give struggling homeowners reprieve by permanently modifying their loans. Unfortunately, the administration has only been able to modify about 600,000 loans to date.

Will economic growth continue?

The current report from the government shows the growth of the economy at an annual rate of 1.8 percent in the first three months of the year. According to analysts, it isn’t expected to grow any faster. Without economic growth, Bernanke’s plan to speed up the removal of foreclosures might not be enough to give life to the housing market.