Housing Market Continues to Stumble

Just a month after a jump in new home construction gave
economists hope that the housing sector was on the mend, the Commerce
Department announced that construction of new homes and apartments dropped 10.8
percent last month to the second lowest pace since the government began keeping
records in 1959.

Applications for building permits, a sign of future demand,
also fell 9 percent.

The drop in construction in March followed a 17.2 percent
surge in February, an unexpected gain driven largely by the construction of new
homes and apartments.

Meanwhile, the number of U.S. households that received at
least one foreclosure notice between January and March grew to 804,000, a spike
of 24 percent over the first quarter of 2008. More than 340,000 foreclosure
filings took place in March alone, a 46 percent jump from the same time a year
ago. Nevada, Arizona, and California were the hardest hit in the country. Along
with Illinois and Florida, they account for nearly 60 percent of U.S.
foreclosure activity.

According to RealtyTrac, a foreclosure listing firm, one in
every 159 U.S. housing units received a foreclosure filing during the first
three months of 2009.

“We saw a record level of foreclosure activity,”
James J. Saccacio, chief executive officer of RealtyTrac, said in a statement.
“The number of households that received a foreclosure filing [in March]
was more than 12 percent higher than the next highest month on record.”

A new factor in the foreclosure crisis is President Barack
Obama’s recently unveiled plan to help up to 9 million borrowers avoid
foreclosure through refinanced mortgages or modified loans. The Obama
administration expects its plans to make a big dent in the foreclosure crisis
although it remains to be seen how widely loan servicers will embrace the
program.

The Wall Street Journal reported this week that the nation’s
largest mortgage companies have recently stepped up their foreclosures on
delinquent homeowners after some had put moratoriums in place while awaiting
details on the administration’s plan. J.P Morgan Chase & Co., Wells Fargo
& Co., Fannie Mae, and Freddie Mac all say they have increased foreclosure
activity in recent weeks. That may mean that more Americans lose their homes
just as the administration’s efforts to prevent foreclosures begin.

On Thursday, the Labor Department also announced that while
new jobless claims fell more than expected for the second week, the number of
Americans continuing to receive unemployment insurance benefits surpassed 6
million for the first time. Initial unemployment claims dropped to a seasonally
adjusted 610,000 from a revised 663,000 last week. While this number, which
reflects the pace of layoffs at companies, has declined, it is far higher than
its level a year ago, when it stood at 369,000. U.S. employers have shed 5.1
million jobs since December 2007.