The housing market continued to struggle in February, achieving a seasonally adjusted annual pace of 1.065 million starts, a slight decrease since January. Compared to 2007, though, overall starts have tumbled by 28.4 percent overall and a painful 40.5 percent in the single-family sector.

Other statistics released today by the Census tell a similar story. Housing permits, which are an important indicator of future construction activity, fell 7.8 percent in February compared to the previous month, to a seasonally adjusted annual pace of 978,000 units. That, too, represents a significant drop in relation to last February; year-over-year, overall permits are down 36.5 percent overall and 41.9 percent for single-family homes.

"If you look at the details, you'll conclude the housing market is still falling off a cliff," says Patrick Newport, an economist with Global Insight, who notes that inventories of new for-sale homes are at record highs. "Even though builders are cutting back, they are still putting up too many houses."

What's a more realistic level of activity? Newport and Global Insight have forecast a pace of 832,000 housing permits in the third quarter, which would be the lowest level of building activity in decades.

Multifamily fared slightly better in today's numbers. Starts of buildings with five units or more actually increased 14.5 percent in February and 23 percent year-over-year. But permits proved problematic as well for multifamily builders, who have struggled with an oversupply of condos in many markets. Those figures showed a 12.2 percent drop in the number of multifamily buildings with five or more units in February and a 20.3 percent fall compared to the previous year.