Starts and permits continue to be weak, but pickup in condo and apartment construction lift overall housing starts.

By Chris Isidore, CNNMoney.com senior writer
February 20 2008: 10:06 AM EST

NEW YORK (CNNMoney.com) -- New construction of single-family homes fell to a 17-year low in January, according to a government report on the battered housing market Wednesday.

At the same time, a pickup in apartments and condo construction resulted in a rare gain for housing starts overall.

Starts of single-family homes fell to an annual rate of 743,000 in the 10th straight monthly decline.

The level of single-family home building is down 5 percent from December, 34% from a year earlier and 60% from the record high reached only two years ago.

Still even with the continued decline in single-family homes, housing starts edged up to an annual rate of 1.02 million from the revised 1 million rate for December. The overall number for January was roughly in line with the forecasts of economists surveyed by Briefing.com.

The increase was due to a gain in starts in multi-family units, such as condos and apartment buildings, which posted a nearly 18% jump from December. Starts of multi-family housing units are a much more volatile measure than single-family starts. The narrow rise in overall housing starts marked only the second rise in the last eight months for that reading.

In addition building permits for single family homes, which are often taken as a sign of builders\' confidence and a better look at the future of the market, fell to an annual rate of 673,000. That also marked the 10th straight month of decline for that measure and like the single-family starts was a 17-year low.

The pace of overall permits fell to an annual rate of 1.05 million from revised 1.08 million in December. Economists had been looking for permits to come in at a 1.04 million rate.

The downturn in housing and home building has hammered the results of the nation\'s largest builders.

Earlier this month, D.R. Horton (DHI, Fortune 500), the No. 2 home builder by revenue, reported a much steeper-than-expected loss in the fourth quarter. Luxury home builder Toll Brothers, the No. 7 builder, reported a sharp drop in sales when it released preliminary numbers at the beginning of this month, saying it is not yet seeing much light at the end of the tunnel.

That followed a report last month from No. 3 Lennar (LEN, Fortune 500) that showed a $1.25 billion fourth-quarter loss, the largest in the company\'s history. In addition No. 1 Centex (CTX, Fortune 500), No. 4 Pulte Homes (PHM, Fortune 500) and No. 5 KB Home (KBH, Fortune 500), all reported fiscal fourth-quarter losses far worse than forecasts in January, as did No. 6 Hovnanian Enterprises (HOV, Fortune 500) when it reported fiscal fourth quarter results in December.

KB Home CEO Jeff Mezger told investors last month that as we enter 2008, we see no indication markets are stabilizing.