The Commerce Department's monthly data on new residential construction for December, released Wednesday, was mixed for home builders as starts fell but permits took an encouraging turn upward.

Starts in December were at a seasonally adjusted annual rate of 529,000, a drop of 4.3% from the revised November estimate of 553,000 (-2,000) and 8.2% below the December 2009 rate of 576,000. Single-family starts fell 9% from November to a rate of 417,000, a drop of 14.2% from the same month in 2009.

Permits, however, jumped 16.7% to a rate of 635,000, still 6.8% below the tax-credit-fueled December 2009 estimate of 681,000. Single-family was up 5.5% to a rate of 440,000, still 14.9% of the pace of December last year.

Seasonality appeared to be one factor in the spread between starts and permits, along with the usual volatility in the multifamily sector. Starts were off 24.7% overall (to an annual pace of 58,000) and down 7.4% (to 50,000) for single-family in the Northeast as winter set in. Similarly, starts were off 38.4% and 35.7%, to 69,000 and 54,000, respectively, in the Midwest. In the South, however, starts were down 2.2% overall to 262,000 and 10.3% to 217,000 for single-family. The West was up 45.8% to 140,000 and 23.1% to 96,000, respectively.

Permits in the Northeast rose 80.6% to an annual pace of 121,000, 14.2% ahead of December, 2009, with single-family jumping 50% to 75,000, 31.6% above the same month last year. The Midwest was up 3.3% overall to 93,000, 20.5% behind the 2009 month, but down 16.9% in single-family to 64,000, 22% off the 2009 pace. The South was down 7.6% to 244,000, 24.9% behind December, 2009, with single-family down only 1.9% to 205,000, 23.5% off the2009 pace. The West was up 43.9% to 177,000 overall, a gain of 33.1% year-over-year, and up 18.5% to 96,000, 12.7% off December, 2009's pace.

Not seasonally adjusted, a total of 34,300 homes were started in December, 26,200 of them single-family. Regionally, estimates of single-family starts were 3,500 in the Northeast, 2,900 in the Midwest, 13,800 in the South and 6,000 in the West.

In a note to investors, Michael Rehaut, home building analyst at J.P.Morgan, said, "Overall, given the moderate decline in starts being roughly offset by the gain in permits, we continue to view demand as demonstrating a stable to slightly improving trend."

Carl Reichardt at Wells Fargo said in his note, "On an initial read of the cumulative data (which will be revised several times in the coming months), 2010 appears to be the second worst year for total starts since 1959. With builders exhibiting a lack of confidence in future sales rates, and with existing home and vacant inventory elevated, we believe production volume will continue to remain relatively constrained. However, permits advanced, suggesting that builders are preparing for a modestly better Spring selling season ahead ... We believe single-family starts will rise a modest 11% in 2011 as the economy begins to improve and a small number of brave, discretionary finance-able homebuyers step into the mix to take advantage of low prices and interest rates."