The February 2011 Residential construction report showed Housing starts dropped -22.5% from January 2011 to a level of 479,000. This is 20.8% below February 2010. We're back to April 2009 levels and this monthly drop was the biggest since 1984.

Single family housing starts dropped -11.8% from January whereas housing of 5 or more units has a whopping -47% plunge from January to February 2011.

Building permits, also dropped -8.2% to 517,000 and are down -20.5% from this time last year. According to Calculated Risk, building permits are at an all time low. Below is the St. Louis Federal Reserve FRED graph for Building permits. The graph shows building permits are not always a smooth line from month to month. There have been data outliers before. The statistical error rate for building permits is much lower than for new construction and completions, a 3.3% vs. 9.8% error window. This report is seasonally adjusted.

Housing Completions dropped -13.9% and are down -13.0% for the year.

Why analysts are surprised is surprising. We have foreclosures, excess inventory and a massive employment crisis going on past three years.

Calculated Risk projects multi-family housing starts, which are your basic rental properties, are probably at a bottom. This is a reasonable projection for few can afford to buy at home the way the economy is going.