WASHINGTON — Experts warn a rise in foreclosures would further depress the housing industry.

More foreclosures would force down home prices and that would deter already ailing homebuilders from starting new projects.

As a result, the economic rebound could suffer. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders.

"Foreclosures hold down the pricing for everybody," said Marty Mitchell, vice chief executive officer of Mitchell & Best Home Builders in Rockville, Md.

Home construction plunged in June to the lowest level since October, the Commerce Department said Tuesday.

"We're going to see very minimal new construction until the stream of foreclosures has ended," said Jack McCabe, a real estate consultant in Deerfield Beach, Fla.

More than 40 percent of the 1.3 million homeowners enrolled in the Obama administration's mortgage relief effort have fallen out of the program, the Treasury Department said Tuesday.