After resisting price cuts, builders have started to roll back the housing bubble.

WASHINGTON (MarketWatch) -- U.S. builders slashed prices by more than 10% in December in a failed bid to boost sales, which dropped about 5% to the lowest level in nearly 13 years, the Commerce Department reported Monday. For the year, sales declined at a record 26.4% pace. "A lousy end to a lousy year," summarized Richard Moody, chief economist for Mission Residential. The grim figures show no relief in sight for a battered building sector and are certain to be a major item on the Federal Reserve's agenda for its two-day policy-setting meeting that begins Tuesday.