Huge supplies of bank foreclosures and HUD homes in Indiana continued to hurt the house building sector of the state last year. Although figures improved from a year ago, they remain at almost historic low. Figures provided by the Builders Association of Greater Indianapolis showed the depth by which home building has gone down since the start of the decade.

The number of homes under Indianapolis foreclosure list increased again in 2010, dragging down prices of homes and making it even harder for homebuilders to compete in a market full of low-priced houses. Last year, a total of 3,720 construction permits for new houses were filed in the counties of Indianapolis, representing a 2.6% rise from 2009, the year considered as the worst for the metro area's house construction sector in over 25 years. The total number of permits last year was only 95 units more than what was recorded in 2009.

According to housing market observers, home building has declined sharply since the start of the industry crisis that saw foreclosures listing in Indiana expanding to all time highs. Between 2000 and 2005, the metro area averaged 13,000 home building permits each year, with the number peaking in 2001 to reach over 15,000. Starting in 2006, permit numbers have remained way below this yearly average.

The flow of foreclosed bank and HUD homes was somewhat eased in the last quarter of 2010 due to the nationwide moratorium on foreclosures, giving hope that home construction will show some improvements. However, the year still ended poorly with only 265 permits issued in December of last year, down by 5% compared with the 279 total recorded in December of 2009.

Foreclosed home listings maintained their growth all throughout 2010, hurting the housing industries of various counties in the metro area. In Marion County, permits totaled 729 in 2010, representing a decline from the 2009 total of 772. Although the difference between the two periods was not much, figures were way off from the 3,600 house building permits issued in the county in 2005. Meanwhile, Hamilton County's permits reached 1,354 last year, declining by 1% from the year before.

According to housing market analysts, the poor performance of the home building market is mainly due to the huge supplies of bank foreclosures and HUD homes in the region, as well as the tight lending requirements that make it difficult for homebuilders to secure financing. High unemployment levels have also been blamed for the downturn in the house construction market.

Original post: http://www.mostlyforeclosures.com/blog/effect-of-foreclosed-bank-and-hud-homes-felt-heavily-by-homebuilders.html on MostlyForeclosures.com, your source of foreclosed homes.