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Economic Recovery Hindered By New-Home Sales

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By : Paul Escobedo    99 or more times read
Home sales dropped dramatically back in the month of January, and government reports indicate that despite an economy that is trending toward recovery, the housing industry continues to struggle and hinder economic growth. This downward trend has continued through March. Expert believe that because of the unemployment rate and so many existing homes sitting vacant new homes sales are having trouble keeping up with the less expensive shadow inventory.

Last year was the worst for new-home sales in half a century. On the heels of the performance, January saw new-home sales decrease by 12.6%. This figures to a seasonally adjusted annual rate of 284,000 - not even half the pace of a healthy economy.

In addition to these figures, businesses are ordering less durable (long-lasting) manufactured goods, which donít bode well for an economy trying to get back on track. Home builders are trying to cut costs where they can because they are trying to compete with the prices of foreclosures. This is a feet and does not sit well for home buyers who are thinking about purchasing a home that was built between 2009 and 2011. However, two industries - aircraft and auto - have helped to keep orders at a healthy level.

For the third time in a month, applications for unemployment benefits declined, according to the Labor Department. This is a positive sign that the job market is gradually improving.

Although layoffs have declined to levels of pre- recession, employers are still not offering enough jobs to reduce high employment. The fact that layoffs have decreased drastically while new hiring hasn't truly increased indicates a clear uneasiness on the part of employers.

The increase in oil and gas prices, resulting from the unrest in the Middle East, could cause the trend of not hiring to continue. As consumers have less to spend, employers will "wait and see."

The economy is growing. The nation's gross domestic product is increasing quarterly. The problem is that this recovery and growth is not happening quickly enough to influence firms to hire at a corresponding rate. Many professionals believe that the housing market hasn't even hit its lowest point yet. The idea that the market must get worse before it gets better, adds to even more uneasiness on the part of those in the industry.

The construction industry will continue to struggle to provide jobs as long as new-home sales remain poor. This is bad news for the economy because economic recovery is powered in large part by the construction industry. Economic forecasters say it could be years before new-home sales are back to a healthy level.
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