The U.S. labor market will hold the key to a recovery in the hard-hit housing sector, according to a Harvard University report released on Monday.

Record high foreclosures and a high jobless rate both pose significant challenges to the housing market, but some recovery in labor markets and record low mortgage rates could partly overcome other pressures, said the study from the Joint Center for Housing Studies at Harvard.

If history is a guide, what happens with jobs will matter the most to the strength of the housing rebound, Eric Belsky, executive director of the center, said in a statement.

Right now, economists expect the unemployment rate to stay high, but if employment growth surprises on the upside or downside, housing numbers could too.

The researchers noted that homeowners would feel poorer with real household wealth declining on a per household basis to $486,600 from $503,500 over the past 10 years, in the lost decade. Foreclosures have reduced some mortgage debt but the level of debt relative to equity still started 2010 at a record 163 percent, the report said.

Despite falling home prices, loan modifications, and softening rents, the share of borrowers with severe housing cost burdens climbed, it said.

(Reporting by Al Yoon; Editing by Leslie Adler)

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