Home foreclosures soar, jobless remain unemployed

By Joanne Morrison

WASHINGTON (Reuters) - U.S. home foreclosures hit a record late last year amid a shakedown in the subprime mortgage market that is taking its toll on the broader economy and forcing many of the nation's unemployed to remain on jobless benefits, data on Thursday showed.

The Mortgage Bankers Association on Thursday said too that the delinquency rate hit its highest since 1985 in the final three months of 2007. While the rate of failing loans swelled across most mortgages, it was led by a growing wave of subprime borrowers unable to make payments.

Added to that, the Labor Department reported that the number of workers remaining on jobless benefits is holding at the highest level in nearly two and a half years. For retailers, the story also is not so bright as they posted mixed February sales results on Thursday, with some signs of struggle as cash-strapped consumers favored outlets where they could save money.

"The epicenter of the U.S. economy's current predicament is housing," said John Lonski, chief economist at Moody's in New York.

Separate data from the National Association of Realtors showed its index of pending contracts to buy previously owned homes was unchanged in January. However, analysts said it was too soon to say this data pointed to an improving housing market.

"The housing market remains stuck in the doldrums. Inventory levels are high, buyer confidence is down, and the economic outlooks is uncertain," said Mike Larson, real estate analyst at Weiss Research in Jupiter, Florida.

"The Federal Reserve is trying to light a fire under housing demand by cutting short-term rates. But credit market turmoil and stingier lenders are thwarting its efforts so far," he added, predicting that a lasting economic recovery isn't likely until 2009.

Prices for U.S. government securities rose steadily as investors flocked to safer investments on fears of a U.S. recession, while stocks were down, with the benchmark Dow Jones Industrial Average off more than 100 points at midday.