It's better for established neighborhoods if those older homes find owners.
New house construction is a major boost to the economy. The new home requires hundreds of products that are primarily manufactured in North America. Lumber, roofing, windows, doors, flooring, appliances, electric components, wiring, cabinets, plywood, carpet, tile, plumbing, etc. are manufactured here in the US and Canada. These industries and their distribution network employ millions of people.
It is a major driver of GDP and our economy.
We will always need new construction. Houses on average last 75 years. They burn down, flooded, earthquakes, hurricanes, torn down, etc. They are tearing down hundreds in Detroit and Cleveland right now. What we are continuing to see is an aging demographic where people wan tot move south and west. Also, more people are moving into 50 and over communities where they do not have to do yard work. Families are also smaller now. There is not as much need for the 3500 square foot house.
I am not sure where you are located, but here in southern NH there are very few foreclosures listed in my Sunday paper. I would guess 30% of the amount there were at the peak.
I have the Fannie May: www.homepath.com site on my favorites. The houses on there now are low end houses/condos in less desirable locations. Four/five years ago there were high end houses in nice neighborhoods.