Less home building means fewer jobs for the economy. Construction work now accounts for about 5 percent of the nation's private employment. But nearly 2 million of the roughly 14 million unemployed Americans previously worked in construction.
Analysts say the economy needs to accelerate job creation before the housing industry can fully recover. Without more jobs and higher wages, home sales will stagnate.
"We probably won't see a strong recovery in construction jobs anytime soon," said Sal Guatieri, senior economist BMO Capital Markets. "Not a lot of people are showing up to builders' lots, not even to kick the tires. We just have to wait it out."
The National Association of Home Builders' index of builder sentiment for February was unchanged for the fourth straight month, at 16, the association said Tuesday. Any reading below 50 indicates negative sentiment. The index hasn't topped 50 since April 2006.
On Wednesday, the Commerce Department will report on home construction for January. The consensus view of economists is that builders broke ground on a seasonally adjusted annual rate of 535,000 homes last month. That's barely half the pace that economist view as healthy.
Homebuilders are struggling to compete with waves of foreclosures that are forcing prices down. Banks foreclosed on more than 1 million homes last year, and this year's figure is expected to be higher. Last year was also the worst in more than a decade for sales of previously occupied homes.
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