New-home construction plunges in February

Builders broke ground last month on the fewest homes in nearly two years, a reflection of declines in home prices and diminished demand that has made it difficult for them to compete.

The Commerce Department says home construction plunged to a seasonally adjusted 479,000 homes last month, down 22.5 percent from the previous month. It was lowest level since April 2009, and the second-lowest on records dating back more than a half-century.

The building pace is far below the 1.2 million units a year that economists consider to be healthy.

Millions of foreclosures have forced home prices down and more are expected this year. Tight credit has made mortgage loans tough to come by. And some potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further.

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