WASHINGTON (Reuters) - Kathleen and Brett Sache are building a six-bedroom, six-bathroom home of their dreams in a sought-after corner of northern Virginia after taking encouragement from a robust local market.
Their confidence was rewarded when their old house sold in just five weeks, allowing them to purchase a plot of almost two acres (0.8 hectare) in Vienna, Virginia, where they are breaking ground this month on a property they hope to live in for the next 30 years.
"We would not have put in a contract to build had we not been confident we could sell our current home," said Kathleen Sache, a physician who voted Republican in the 2008 presidential election but would not say who she supports this time around.
The November 6 U.S. presidential election between President Barack Obama and presumptive Republican challenger Mitt Romney may be decided by a small number of "swing" states - those that could go to either man - where the health of the housing market looms large for voters as they weigh their choice.
A Reuters examination of the latest housing data in 10 states that may determine the election's outcome shows signs of hope in even the most battered real estate markets, notably Florida, with some other key battlegrounds doing much better.
In addition to Florida, the other states were: Arizona, Colorado, Iowa, Nevada, New Hampshire, North Carolina, Ohio, Pennsylvania and Virginia.
The recovery in home prices in battleground states is good news for the Democratic president as he stays barely ahead of Romney in national opinion polls.
In the northern Virginia suburbs of Washington, home prices in the first quarter of this year rose 5.9 percent compared to the same period a year earlier, and were up 2.4 percent for the state as a whole.
"We definitely saw a lot of movement in our neighborhood that the economy was picking up," Kathleen Sache said.
The uptick already may be helping Obama. A survey released this month by the firm Public Policy Polling put Obama 8 percentage points ahead of Romney in Virginia, which backed a Democratic president for the first time in a generation when Obama won there in 2008.
The collapse of housing markets around the country played a key role in triggering the financial crisis that dragged the United States into recession from 2007 to 2009.
The health of housing markets continues to exert a strong influence on the economy, and some experts believe that high levels of foreclosure and losses in home values are helping hold back the economic recovery. A home is the most costly purchase most Americans make, and for many it is their most valuable asset.
"The housing market is a lot in the news and that will certainly weigh (on voters)," said Mark Rom, an associate professor at Georgetown University's Department of Government.
Realtors in Denver, which dominates the Colorado real estate market, are reporting a shortage of housing and a 10.5 percent price rise in April versus a year ago. In Iowa, there was an 18 percent jump in the number of home sales in March compared to the same month a year earlier.
Ohio, a state that often plays a pivotal role in deciding presidential elections, has seen its housing market improve steadily, with median prices up 8.9 percent in March from a year ago and sales up by almost the same level.
"The perception is that Ohio is coming back, that things are good, and in my industry, perception means an awful lot," said Bob Miller, president of the Ohio Association of Realtors.
Romney's campaign plans to adjust its strategy in states according to their economies and housing markets to try to deny Obama credit for improving conditions.
"In Ohio, you can make the case that it certainly isn't as bad as other states. But our feeling is that has a lot more to do with (Republican) Governor (John) Kasich than it does with President Obama," said Rich Beeson, Romney's political director.
"If President Obama's policies were working, they would work all across the country and not just in certain states," he said. "You're not necessarily going to talk about foreclosures in Fairfax County, Virginia. But in Clark County, Nevada, that is all that matters."
Fairfax County is one of the richest in the United States. Clark County includes Las Vegas, which was hit particularly hard by foreclosures.
Obama has conceded that his administration could have done more to improve housing market conditions across the country.
An overhang of foreclosed properties worth less than the price for which they were purchased has been a particularly difficult issue to resolve, in part because of questions around loan forgiveness. Romney has attacked Obama for failing to fix the problem.
But Romney provided ammunition to the Obama camp when he said the foreclosure process should be allowed to run its course and hit bottom. That may be a very unwelcome message in a state like Florida that is still saddled with hundreds of thousands of foreclosed properties.
Florida is considered a crucial battleground state in the election as Obama and Romney plot a path to winning the 270 electoral college votes needed to secure the presidency. Florida, which Obama won in the 2008 election, accounts for 29 electoral college votes - more than 10 percent of the total needed to win.
"There is no path to victory for Romney without Florida and Virginia. Those are going to be tough states for Republicans to get this time around, particularly Virginia," said Jim Kessler, at Third Way, a Washington think tank.
Florida was at the heart of the collapse of the real estate market and its economy remains fragile. But Florida median home prices were up by more than 10 percent statewide in March compared to the same period a year ago and realtors are reporting that home inventories are heading down.
"The economic story in Florida is improving and it goes hand in hand that you will see some bounce back, or at least some stabilization, in the housing sector," said Mike Chriszt, an economist at the Federal Reserve Bank of Atlanta, whose district encompasses Florida.
Obama's campaign can be expected to seize on signs of improvement to validate his claim that he is putting the economy back on track and remind voters that the housing collapses began under his Republican predecessor, George W. Bush.
"Floridians know that when the president took office, this state had been building housing at an unsustainable pace in a bubble economy that could not last," said an Obama campaign official who spoke on condition of anonymity. "It was an economy built on speculation."
Despite better housing numbers, unemployment in Florida is still at 9 percent, higher than the national average.
Nevada, which went for Obama in 2008, has struggled to recover from the collapse of its housing market and has an unemployment rate of 12 percent. There are now signs of the housing market picking up in the state.
Obama was in Nevada last Friday for an event in Reno at which he urged Congress to help make it easier for homeowners to take advantage of low interest rates to refinance their mortgages.
Thomas Schoenrock and his wife Jessica recently bought a house in Las Vegas after moving to the city to take advantage of prices that are roughly half compared with the cost of homes in their native Washington state.
"For us to get a house in the market we came from would have cost $250,000. In the market here, they are practically giving them away," Thomas Schoenrock said. The median home price in Las Vegas in April was $127,900, up 2.3 percent from a year ago.
A medical research technician, Schoenrock said he would not have taken the financial plunge of becoming a homeowner if he had not felt secure in his profession, and will definitely be thinking about the economy when he casts his ballot on November 6.
"We need someone that we can have confidence in that they can run the country - because of the instability of the economy," said Schoenrock, who said he remains undecided between Obama and Romney.
Editing by Alistair Bell and Will Dunham