The latest study on the government's REO program predicted the job market sprouting with life as a result of its initiatives.

The White House’s REO conversion plan got a huge endorsement yesterday from analysts at Morgan Stanley, who predicted that the program could create more than one million new jobs.

According to a HousingWire summary of the analysts’ findings, the program will create jobs in both the real estate and construction sectors solely with private capital – in other words, without the use of taxpayer funds.

“On a macro level, (the REO rental program) could not have come at a better time,” the analysts said in HousingWire’s piece.

The government’s plan, which seeks to take the roughly 250,000 REO properties on the books of Fannie Mae, Freddie Mac and the Federal Housing Administration and convert them into rental units, was originally announced at the start of the year, and the Federal Housing Finance Agency has already begun pre-screening investors to purchase the properties.

Working with the assumption that eight million REOs will be serviced and sold as distressed sales over the next five years, the analysts low-balled their estimates, halting the number of properties at just four million. Even under such conditions, though, they stressed the benefits of the program.

“Even if only half can be turned into rentals, which would represent only a 20 percent increase in the total number of single-family rental properties available today, that could result in the creation of one million one-time construction-oriented jobs plus a possible additional 800,000 in permanent jobs, mostly in some of the hardest-hit sectors and the hardest-hit economic areas of the country,” the analysts said.

The analysts’ math is simple – assuming four jobs per serviced house, and with three to four months of labor on each home, the 0.25 annual job equivalent (three months is a quarter of a year) would result in one million jobs for the four million properties, in what the analysts labeled “one-time” job creation.

For the permanent job creation front, there would be approximately 0.20 full-time, on-going jobs per house, which would result in 800,000 jobs in servicing, cleaning and other housing-related jobs.

“With the added benefit of the potential for significant private sector-led job creation, potentially in the hardest-hit sectors in the hardest-hit regions, we are increasingly confident that (the program) can have a positive impact on housing and the macro economy as a whole,” the analysts said.

Morgan Stanley is not the first firm to come out in support of the measure. A couple weeks back, Capital Economics said the conversion program was “best housing fix so far.”

And a housing fix would certainly be welcome for the nation’s unemployed. As HousingWire points out, the latest Bureau of Labor Statistics data shows the U.S. economy has lost 2.5 million housing-related jobs since 2006, and 2.16 million of those were in construction.