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Builders mired in a three-year housing slump are finding it hard to attract buyers as property values drop and banks tighten lending standards. Declines in construction spending remain a drag on economic growth, increasing chances of a prolonged recession.

“The problems in housing were exacerbated by the credit problems we had in September and October,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, who forecast housing starts would drop to a 790,000 annual pace. “Housing will be slow to rebound from that period.”