The U.S. housing sector continued to show weakness in January with housing starts and building permits sinking to new record lows for the second consecutive month.

U.S. housing starts fell to an annualized pace of 466k, representing a month-over-month decrease of 16.8%, according to the U.S. Department of Commerce on Wednesday morning.

The consensus was looking for January to show a decline to 529k. The previous month's reading was revised up to 560k from a previously reported 550k.

Single-family homes - the most important component in the report, accounting for four-fifths of housing starts - fell 12.2% to 347k, compared to the previous month's 395k. Single-family units have been falling for 20 of the past 21 months.

Multiple-family homes fell to 119k, compared to the previous month's 165k level.

Meanwhile, building permits fell to 521k in January, down from 547k in December. The consensus was looking for 525k building permits.

Single-family permits fell 8% in the month to 335k in January from December's 364k. Multiple-family unit permits fell to 186k, up from 183k units in December.

Prior to the release, TD Securities economist Millan Mulraine said, "In the months ahead, we expect new residential construction to remain soft as the drag from a worsening domestic economy, tighter lending conditions and the massive overhang in the inventory of unsold home, which currently stands at over 12 months, continue to temper new building activity."

By Stephen Huebl and edited by Megan Ainscow
©CEP News Ltd. 2009