A bevy of issues are dogging the ailing housing industry: high unemployment, tighter bank lending standards and bigger required down-payments and fear home prices will fall further has kept many people from buying homes. That's despite low mortgage rates and home prices that are the most affordable in a generation.

The industry received a big boost in the first half of last year when the government offered tax credits to home-buyers. But once they expired in April, home sales plummeted.

Economists expect home prices will hit bottom late this year before a modest recovery takes hold. Large swaths of the hardest-hit states, including Arizona, California, Florida and Nevada, continue to struggle with foreclosures and short sales, when a lender allows a borrower to sell their property for less than what is owed.

Builders have been hopeful that a strong spring season, traditionally the best for home construction, could help power a turnaround.

Regionally, the Northeast and Midwest saw two-point gains in their index of construction activity, to 20 and 14, respectively. The West held steady at 17 and the South, the largest regional housing market, plunged four points, from 19 to 15.

The index gauging current conditions fell one point, to 16, while the recorded foot traffic of prospective buyers rose by a point, to 13. The estimate of single-family home sales over the next six months dropped three points, to 23, falling to its lowest level since October.