It’s pretty evident that the housing slump isn’t going to bounce back any time soon. This is despite worried homeowners drastically lowering their asking price and local Realtors frantically trying to convince the public that the market is rebounding.
Still, the National Association of Realtors grimly reported last week that existing home sales fell to a four-and-a-half-year low. Making matters worse, the Commerce Department then reported that new home sales declined by 6.6% in June, a 22.3% dip below 2006 levels.
Now, a new report reveals that housing-related job cuts have soared to record levels in 2007. Housing-related job cuts account for 10% of the 393,499 job cuts announced so far this year, according to global outplacement consultancy Challenger, Gray & Christmas.
This is compared to 2006, when housing cuts represented less than 3% of the year-end total, says the Challenger report.
In fact, the report suggests the impact of the housing market slump is probably even greater than these numbers indicate.
“We are seeing job cuts in several other industries, including retail, consumer products manufacturing, and industrial products manufacturing resulting from the slumping market,” said John Challenger, CEO of Challenger, Gray & Christmas.
Indeed, North Carolina-based Karastan, the maker of rugs and carpeting, just announced it will lay off 47 workers due to the housing slump and the resulting drop in demand for home furnishings.
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In Florida, state officials attribute an increasing number of construction workers out of jobs to an increase in the state’s unemployment rate (though still a full point below the national number). The Florida Agency for Workforce Innovation links the soft housing market to the loss of 18,000 construction jobs.
Meanwhile, homebuilders across the nation are reporting low second-quarter earnings, blaming excess inventory and forfeited deposits. California-based builder Standard Pacific Corp. just posted a Q2 loss of $165.9 million. Michigan-based Pulte Homes reported a Q2 loss of $507.6 million. Last month, Florida-based Lennar sang a similar sad tune, posting a total loss of $244.2 million.
This data confirms much of the Challenger report, which shows the majority of housing job cuts came from firms in the construction and mortgage industries.
Unlike the dot-com bubble, which collapsed rapidly after the bubble burst, the deflation of the housing bubble could take several years to play out, the firm predicts.