The huge supplies of foreclosures houses continue to erode optimism among home builders in the U.S. According to most of them, the depressed housing industry will continue to hold the nation's economy back and prevent it from achieving a sustained recovery this year.
According to economists, the huge number of homeowners who were unable to avoid foreclosures last year resulted in further deterioration in the home building market. New home sales declined again last year as low-priced foreclosed properties took a huge chunk out of new houses' market share, resulting in lower sales figures for new homes. This limited the power of home builders to start residential projects and also lowered demand for construction workers.
Construction employment currently accounts for 5% of the country's private jobs. The percentage used to be higher, economists stated, but the poor condition of the housing industry has resulted in thousands of industry-related jobs to be lost in the past few years. The rise in repossession property listings and foreclosed homes caused home builders to close shops or scale back residential projects. Labor market data showed that, of the estimated 14 million Americans who are unemployed, around 2 million used to work in the construction sector.
Economists stated that the huge supplies of foreclosures houses are already posing massive problems for the economy. In combination with high unemployment rates, the impact is even worse. They stated that more jobs should be created to help the housing market recover. They explained that without jobs, there will be fewer buyers of housing units and the residential property market will continue to decline.
Industry analysts stated that not a lot of jobs will be created in construction this year; not while auction home foreclosures are at record highs. They stated that workers should rely on other sectors for new jobs since home builders are unlikely to engage in construction activities this year. The National Association of Home Builders reported that the confidence index in the sector remained at 16 for the fourth month in a row.
A rating that is below 50 in the index means a negative sentiment among home builders. This poor outlook will likely continue for the rest of the year, according to industry observers, since foreclosures houses are expected to remain high for the rest of 2011.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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