Housing starts dropped 22.5 percent from January to February, to a seasonally adjusted annual rate of 479,000 — the second-lowest rate ever in U.S. Census Bureau records dating to 1959.

Monthly housing starts have fallen below an annual rate of 500,000 only three times since the government began collecting data more than 50 years ago.

The first time they crossed that threshold was in January 2009, when the pace of new housing starts slowed to 488,000 a year. In April 2009, housing starts set a new record low rate of 477,000 per year.

That compares to the all-time high seen in January 2006, when builders were starting construction on new homes at an annual rate of 2.27 million per year.

Because construction and the jobs it creates typically leads the nation out of recessions, economists keep a close eye on housing starts.

Housing starts had been on the rebound last year, heating up to an annual rate of 679,000 starts in April before cooling off and totaling 587,000 for the year.

Population growth and the need to replace aging housing stock means that, in the long run, builders usually need to construct at least 1 million homes a year to keep up with demand.

But a glut of foreclosures and pent-up demand on the part of sellers means there’s plenty of inventory available in many markets. Builders are having difficulty obtaining financing to start new projects, and must price homes they do complete competitively.

High unemployment and a slowdown in immigration have reduced the rate of household formation from between 1.2 million and 1.4 million a year during the first half of the decade to less than 1 million a year, the Joint Center for Housing Studies of Harvard University said in its last "State of the Nation’s Housing" report.

The Harvard report, which came out last summer, concluded that thanks to cutbacks in homebuilding there’s already a better balance between housing supply and demand. What’s holding back residential construction is soft demand for housing — not a large oversupply.

More recently, economists at the UCLA Anderson Forecast said that while the economy is growing, they expect housing will continue to lag behind other sectors.

Although low interest rates make housing more affordable, builders are still struggling with "the glut of new product created during the bubble years of 2004-2007, the tidal wave of foreclosures, and increased credit standards being imposed by lenders," the forecast said.

UCLA Anderson Forecast economists expect housing starts to grow 12 percent this year, to 658,000. Only when employment picks up in 2012 will housing starts break the 1 million mark, the forecast predicted, approaching 1.5 million in 2013.

The latest numbers from the Census Bureau don’t point to a resurgence in building anytime soon. Building permits were issued at a seasonally adjusted annual rate of 517,000 in February, down 8.2 percent from January and 20.5 percent from a year ago.

A recent survey shows builders are still pessimistic about the near-term prospects for single-family home sales, but that their outlook improved in March.

The National Association of Home Builders/Wells Fargo Housing Market Index rose by one point in March to 17 on a 100-point scale.

A score under 50 indicates that more builders view sales conditions as poor than good. But the index is at its highest since May 2010, when federal homebuyer tax credits were still goosing sales.

The index is made up of three components: current sales conditions, which held steady from February at 17; traffic from prospective buyers (unchanged at 12); and sales expectations in the next six months (up 2 points to 27).

Prevailing indicators "portend some improvement in the overall economy, which should generate modest housing market gains later this year," said NAHB Chief Economist David Crowe in a statement. "Unfortunately, most small builders report that they are no more able to obtain credit for new construction today than they have been in the past year, and this is a major impediment that is keeping them from putting their crews back to work."

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