U.S. builders broke ground in January on the fewest houses on record as a lack of credit and plunging sales exacerbated the worst real-estate slump since the Great Depression. Housing starts plunged 17 percent last month to an annual rate of 466,000, lower than projected, according to figures from the Commerce Department today in Washington. A report from the Federal Reserve showed industrial output sank in January for the sixth time in seven months. Builders are struggling as record foreclosures swell the glut of homes on the market, undermining efforts to revive demand and lighten inventory by cutting prices. President Barack Obama today said his administration will use $75 billion to bring down mortgage rates and encourage loan modifications to stem repossessions. “The problem with the build-up in inventory is coming from the increasing number of foreclosures,” Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies in Cambridge, Massachusetts, said in a Bloomberg Television interview. “It’s about time the government intervened so directly in the problem.” Stocks gained on speculation the president’s plan will help ameliorate the decline in housing. The Standard & Poor’s 500 Index advanced 0.7 percent to 794.7 as of 9:45 a.m. in New York. Treasury securities fell. More Than Anticipated Economists forecast starts would fall to a 529,000 rate, according to the median on 73 estimates in a Bloomberg News survey. Projections ranged from 480,000 to 578,000. The government revised December starts up to 560,000 from a previously reported 550,000 pace. Building permits, a sign of future construction, dropped 4.8 percent to 521,000. They were forecast to drop to a 525,000 pace. The government began keeping records on housing starts in 1959. Output at factories, mines and utilities dropped 1.8 percent last month after decreasing 2.4 percent in December, the Fed said today. Car and truck assemblies fell to the lowest level on record. Construction of single-family homes decreased 12 percent to a 347,000 rate, today’s report showed. Work on multifamily homes, such as townhouses and apartment buildings, dropped 28 percent from the prior month to an annual rate of 119,000. Broad-based Drop Housing starts declined in all four regions, led by a 43 percent plunge in the Northeast and a 29 percent drop in the Midwest. Obama’s housing recovery plan is seeking to help as many as 9 million people restructure or refinance their mortgages to avoid foreclosure. The Treasury Department today also said it will double the amount of stock purchases of Fannie Mae and Freddie Mac to as much as $200 billion of each company. The president yesterday signed into law a $787 billion stimulus package that provides tax breaks and government spending designed to resuscitate the U.S. economy. “No one program, no matter how well designed it is, is going to solve all the problems at one time,” said Adam York, an economist at Wachovia Corp. in Charlotte, North Carolina. “We are going to have a long, agonizing road to recovery.” While foreclosure-driven declines in prices have helped boost sales of existing homes, they are depressing new-home purchases as builders can’t compete. New-home sales dropped in December to a record low 331,000 annual pace, according to figures from the Commerce Department. Supply Glut At that pace, it would take a record 12.9 months to whittle down the number of new houses on the market, more than twice the five-to-six months supply the National Association of Realtors has said is consistent with a stable market. It also suggests that builders will continue to hold back on production in coming months. The National Association of Home Builders/Wells Fargo sentiment index edged up to 9 in February from a record-low 8 last month, the group said yesterday. Readings less than 50 indicate the majority of those polled said conditions were poor. While the group’s gauge of buyer traffic increased, builders’ expectations for sales six months from now fell to a record low. Residential investment has been a drag on the U.S. economy since the first quarter of 2006. Economists surveyed by Bloomberg earlier this month projected the U.S. will remain in a recession through at least the first half of this year. “The past five months have been among the most difficult in U.S. economic history,” Toll Brothers Inc. Chief Executive Officer Robert Toll said on a conference call Feb. 11. Homebuyers are worried they may lose their jobs and won’t be able to sell their existing homes, he said. Toll Brothers, the largest U.S. luxury homebuilder, last week said first-quarter revenue plunged 51 percent.

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