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Crisis in Foreclosure Bothers Homebuilders in the U.S.

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By : John Cutts    99 or more times read
The high unemployment rate and the continuing crisis in foreclosure have made home builders less optimistic about the future of the U.S. housing market in the coming months. According to the National Association of Home Builders (NAHB), the confidence index measuring builders' sentiments have remained at 16 as of December 2010.

In California, Long Beach foreclosure listings and distressed property numbers in most key areas of the state remain high. Local developers and builders mostly agree with the nationwide sentiment which made the national index remain in the negative. Although confidence level as of December is the highest since June of this year, it is still below 50 which indicated continuous negative feelings about the market. The last time the index has reached at least 50 was in April 2006.

Despite the large supply of cheap homes under foreclosure listings in California, prices and sales have both declined. Nationwide, new housing sales declined four times within a period of six months. In November, prices of new houses nationwide dropped to their lowest level within a seven-year period. Home builders were forced to lower their prices to enable them to compete with thousands of foreclosures being sold in the market.

According to NAHB, the crisis in foreclosure will continue, with December 2010 sales expected to be even lower than past periods. They stated that huge numbers of foreclosed properties will remain the main reason, coupled with strict lending rules and high unemployment rates. In addition, December has always been a poor time to sell residential properties in the whole country.

However, the association did predict that spring will bring some improvements in employment which will in turn improve consumer confidence. Any improvement in consumer confidence is good news for the housing industry since it will mean more people will be finding foreclosure homes and new housing units and most of them will likely make purchases then.

Higher home sales will also mean more job openings in the construction industry. The home building industry has always been a key element in any economic recovery, industry experts have stated. Despite the ongoing crisis in foreclosure, improvement in consumer confidence will bring in more construction jobs and will also result in higher tax-generated revenues all around the country.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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