U.S. housing starts declined to a seasonally adjusted annual rate of 557,000 in December vs. 580,000 in November, a 4% drop, according to estimates by the Commerce Dept. reported in the latest Economic Report by MarketWatch.

Starts of single-family homes in 2009 were the lowest on record dating to 1959, MarketWatch said. The report noted that housing starts of single-family homes, condominiums and apartments were basically flat during 2009, with monthly fluctuations.

The number of new homes on the market as of November, at 235,000, represented the fewest since 1971, the report said.

Builders were described as "pessimistic" about a recovery.

However, the number of building permits rose 10.9% to a seasonally adjusted annual rate of 653,000, the highest number in 14 months, MarketWatch reported.

Building permits for single-family homes in December were up 8.3%, the report noted.

Building permits correlate with housing starts over time and are perceived as the most reliable and important numbers by many economists, MarketWatch said.

Starts fell sharply in the Northeast and Midwest, rose slightly in the South, and were essentially flat in the West.

The government has acknowledged that its monthly housing data is volatile and subject to sampling and other statistical errors, and major revisions are common, according to MarketWatch.

Read the MarketWatch article.