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To buy a house most people require a job and a mortgage they can afford to repay. Not to mention confidence that the house will one day be worth at least as much as it cost. But until the latter is true, banks will be reluctant to lend as they worry about further losses. Such is the problem at the heart of the financial crisis. So where (and when) will house prices stop falling?

Nationally, home prices have fallen 23 per cent since the July 2006 peak, according to the Case-Schiller index, bringing them back to 2004 levels. Returning to 2001 prices, when the housing boom began, requires a further 25-30 per cent drop. At the current rate of decline, that will take just more than two years, meaning housing is only halfway through its slump.

Such a timescale reflects the long process of cutting Americans’ debt. Lombard St Research, in a report for Knight Vinke, calculates that to move the proportion of household income spent on debt (at normal interest rates) from the current 18 per cent back to the long-term average of 15 per cent, may require zero growth in lending for the next three years.

And property prices move slowly. In the late 1980s and early 1990s, real house prices fell in 267 metropolitan areas. According to the Office of Federal Housing Enterprise Oversight, half of those areas took more than 10 years to recover to previous peaks.

Meanwhile, there are no rays of light to report. Too many houses are on offer – according to Creditsights, the proportion of home owner inventory vacant and for sale stands at 2.8 per cent, almost twice the average between 1981 and 2001. Rising numbers of foreclosures (which follow the direction of unemployment) will continue to add supply at the same time as the recession worsens. Even those with jobs should stay on the sidelines.

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