Economists say it could take three more years before the industry begins building homes at a healthy rate. In the mean time, the housing downturn is dragging on the broader economy, with one-quarter of the jobs lost since the recession began in the construction field.

Builders normally help lead the economy out of a recession. Construction projects fuel growth and that leads to more hiring.

But a year and a half after the recession officially ended, builders are struggling to compete in markets flooded with unsold homes — many of them foreclosures that are depressing prices.

"Housing in the past has always been one of the key drivers getting the economy back on track. It is not going to happen this time because there is a huge glut of homes out there," said Patrick Newport, U.S. economist at IHS Global Insight.

Homebuilders broke ground on a total of 587,600 homes in 2010, just slightly better than the 554,000 started in 2009, the Commerce Department reported Wednesday Those are the lowest annual totals on records dating back to 1959.

And the pace is getting worse. The Commerce Department reported Wednesday that builders started work at a seasonally adjusted annual rate of 529,000 new homes and apartments last month. That's a drop of 4.3 percent from November and the slowest pace since October 2009.

A big reason for the decline is that people are buying fewer single-family homes, which represent nearly 80 percent of the market. Single-family home construction fell 9 percent to an annual rate of 417,000 units in December.