New home starts plunge 14% in December -- a 16-year low

New home construction plunged 14% in December 2007 to a seasonally-adjusted annual rate of 1.01 million units, below the 1.14-million-unit consensus estimate, and the slowest pace in 16 years, the U.S. Commerce Department announced Thursday (pdf). Further, for 2007, new home construction fell 25% to 1.35 million units -- the lowest total since 1993.

Economist Steve Affinito told BloggingStocks Thursday December 2007's new home construction statistic closes out a difficult year for housing, to say the least.

Very weak statistic

"It's a very weak stat, one that confirms the housing sector's deep correction in 2007," Affinito said. "It indicates that builders pulled-back considerably in the face of an oversupply of new homes, and the inability of the market to work-off sales of existing homes."

Affinito added that he expected the housing sector to "take at least 1 percentage point off U.S. GDP in 2008." The earliest possible recovery quarter for the housing sector is Q1 2009 or Q2 2009, Affinito said.

On a year-over-year basis, housing starts are down 38%, the nation's biggest housing start slump since 1980.

Meanwhile, building permits, an indicator economists and analysts use to gauge future housing activity, fell 8% in December 2007 to a seasonally-adjusted rate of 1.07 million, the Commerce Department said. Single family home building permits fell 10% in December 2007 to 692,000 and fell 29% in 2007 to 1.05 million -- the lowest total since 1992.