Housing starts fell to a new yearly low in December with builders breaking ground on just 417,000 single-family units annualized, according to new government figures released Wednesday morning.

However, the apartment sector showed signs of life with multifamily starts coming in at 102,000 units annualized. Compared to December 2009, single-family starts fell 14% while multifamily activity rose by 30%.

Some housing economists believe the multifamily sector has a bright outlook for the next few years as unemployed workers abandon their mortgages and move into apartments. (Some investors are buying homes with the idea of renting them out.)

Although housing starts were weak, permits moved higher during the month to 440,000 single-family units annualized, the best reading in that category since May (486,000).

Weiss Research said: "Last month didn't look so hot, but the future looks a lot better. Construction slumped to a one-year low in December, yet builders of apartments, condominiums and houses pulled more permits than in any month since last March. The volatile multifamily market saw a huge surge, while activity in the core single-family market perked up at a more measured pace."

"The figures point to continued improvement in housing, driven by increased buyer confidence and a gradual stabilization of the job market. But the recovery is a tepid one, and will remain so in 2011 due to the overhang of foreclosed property, rising mortgage rates, and a 'once burned, twice shy' mentality when it comes to real estate across mainstream America," The firm added.

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