WASHINGTON (AFP) - US President-elect Barack Obama on Saturday announced the selection of Shaun Donovan as his secretary of housing and urban development, taking another step in the formation of his future cabinet. Making the announcement in his weekly radio address, Obama said that Donovan, currently the New York City Commissioner of Housing Preservation and Development, "will bring to this important post fresh thinking, unencumbered by old ideology and outdated ideas." A qualified architect, Donovan served at the Department of Housing and Urban Development (HUD) during the Clinton administration. As Commissioner of Housing Preservation and Development in New York, he helped create the largest municipal affordable housing plan in the country. "He understands that we need to move past the stale arguments that say low-income Americans shouldn't even try to own a home or that our mortgage crisis is due solely to a few greedy lenders," Obama said of Donovan. "He knows that we can put the dream of owning a home within reach for more families, so long as we're making loans in the right way, and so long as those who buy a home are prepared for the responsibilities of homeownership," added the president-elect. Construction starts on new US homes and housing building permits fell to record lows in October as the prolonged slump in the real-estate sector deepened, according to government data. Housing starts dropped 4.5 percent to an annualized rate of 791,000 units, the Commerce Department said, the lowest level since it began publishing the data in January 1959. On a 12-month basis housing starts were down a whopping 38.8 percent despite government efforts to revive credit flows and stem a rising tide of foreclosures in the wake of the collapse of the housing market in mid-2006. US officials say that correcting the economy's current downturn requires a recovery in the huge housing market. Obama noted that one in 10 American families who owns a home is now in some form of distress and called this situation "deeply troubling." "It not only shakes the foundation of our economy, but the foundation of the American Dream," he said. "There is nothing more fundamental than having a home to call your own." The president-elect stressed his administration will need to approach the old challenge of affordable housing "with new energy, new ideas, and a new, efficient style of leadership."