As the housing market exits its typical buying season, it faces what many analysts predict to be several months of an ongoing search for a bottom and many years of slow recovery unless bold action is taken now. Moody’s Analytics lowered its near-term outlook for housing and the broader economy this week. Home sales and starts are now hitting a bottom, while home prices will continue to sink until early 2012, said Celia Chen, senior director at Moody’s Analytics in a research note. “As 2011 began, the recovery appeared healthy and ready to turn into a self-sustaining expansion. Job growth was strong, unemployment was falling, and income and consumer spending were accelerating,” Chen said. “Today, the economy is struggling to avoid another recession.” Recent housing indicators remained stable over the last three months. Housing starts averaged 590,000 units, house prices were flat, according to the National Association of Realtors and CoreLogic (CLGX) indices. But all data were down from last year and should only show minimal gains by the end of 2011. Chen expects existing home sales will reach a 5.3 million annualized pace, and housing starts will touch 640,000. Next year, she said sales should reach a 6.5 million pace and housing starts could hit 1 million. Of the bankers surveyed by analysts at the consumer credit firm FICO and the Professional Risk Managers International Association more than half do not expect home prices to climb back to 2007 levels before 2020. “Have we finally hit rock bottom? That’s hard to say, but according to our survey, it’ll be quite some time before prices fully recover. The fact is that the market needs help to clear the backlog of distressed properties,” researchers said. “We are in no man’s land right now.” Both Mark Zandi, chief economist at Moody’s Analytics, and the surveyors said the most obvious policy step to take would be the new refinancing package the Obama administration is currently putting together. Most believe the upcoming changes will simply be a tweak of the underwhelming Home Affordable Refinance Program. “Economic logic strongly favors action to promote refinancing. With current mortgage rates near 4% and the median rate on outstanding mortgages above 5.75%, the potential rate reduction could average almost 175 basis points,” Zandi said, adding that the savings to borrowers could be around $63 billion a year, though estimates vary wildly. Zandi also pointed out that the estimated 2012 bottom to home prices hinges on a restarted foreclosure process very soon, and that depends on how quickly the attorneys general and the banks resolve their differences in the robo-signing talks. The FICO and PRMIA surveyors agreed. “Something bold has to happen – either an acceleration of foreclosures that will force prices down to clear the market, or the adoption of aggressive policies that encourage the resetting of loan terms, such as the proposed expansion of the number of homeowners that qualify for refinancing,” they said. Write to Jon Prior. Follow him on Twitter @JonAPrior.