Construction of new homes and apartment fell 16.8 percent last month to a seasonally adjusted annual rate of 466,000 units in the report released Wednesday by the Commerce Department. That was the slowest pace recorded since 1959.

The rate was down 16.8 percent from December's revised reading of 547,000, and 56.2% lower than year-ago level. That was way below the economists expected which was 530,000 units.

Housing starts have declined 80 percent from their peak of 2.3 million in January 2006 and last month’s figure was the fourth straight month in which housing starts fell to a new record low.

Applications for building permits, a reliable gauge of future construction activity, fell 4.8 percent to a record low of 521,000 units.

The applications were down 4.8 percent from December’s revised reading of 560,000, and 50.5 percent lower than January 2008. Economists were expecting permit applications to fall to 527,000.

The sharp decline in building activity could actually help the struggling market rebound as supply and demand is undergoing correction.