FLASH: October Construction Activity Plunges by Largest Amount Since 2001 Recession

WASHINGTON (AP) -- Construction activity in October plunged by the largest amount since the recession in 2001 as home building fell for a record seventh consecutive month.

The Commerce Department reported that building activity dropped 1 percent to a seasonally adjusted annual rate of $1.18 trillion in October following a 0.8 percent fall in September. It was the biggest decline since a similar 1 percent drop in September 2001, a month when the country was hit by the terrorist attacks as it was mired in a recession.

The new report served to underscore the significant reversal in the fortunes of the housing industry, which had been one of the economy's standout performers as the lowest mortgage rates in four decades pushed sales up to record highs for five straight years.

Demand, however, has cooled this year as buyers have balked at the huge run-up in prices of recent years. Builders have been offering a host of incentives from kitchen upgrades to free swimming pools to move a record backlog of unsold homes.