Building permits dropped for the second month in a row, down 1.9% in December and missing expectations of a 0.6% rise. Permits posted a year-over-year increase of just 1%, the weakest growth since mid-2011.

The loss was led by a decline in multi-family, the lowest since June.

Housing starts rose back to near cycle highs, beating expectations for the 4th month in a row.

Single-family authorizations in December were at a rate of 667,000, which is 4.5% above the revised November figure of 638,000. Authorizations of units in buildings with five units or more were at a rate of 338,000 in December.

"Housing market activity, both starts and permits, have been increasingly volatile as of late, leaving underlying momentum in building moderate at best with levels only modestly above those seen at the start of the year," said Lindsey Piegza, chief economist for Sterne Agee. "Demand for housing remains under pressure with Americans still struggling to accumulate enough wealth to afford a home purchase. With demand restrained, housing insiders remain cautious not to oversaturate the market with additional, new supply. As the Fed noted in the most recent FOMC statement, the recovery in housing, while positive, remains disappointingly 'slow.'" 

An estimated 1,032,900 housing units were authorized by building permits in 2014. This is 4.2% above the 2013 figure of 990,800.

Privately-owned housing starts in December were at a seasonally adjusted annual rate of 1,089,000. This is 4.4% above the revised November estimate of 1,043,000 and is 5.3% above the December 2013 rate of 1,034,000.

Single-family housing starts in December were at a rate of 728,000; this is 7.2% above the revised November figure of 679,000. The December rate for units in buildings with five units or more was 339,000.

An estimated 1,005,800 housing units were started in 2014. This is 8.8% above the 2013 figure of 924,900.

Privately-owned housing completions in December were at a seasonally adjusted annual rate of 927,000. This is 6.3% above the revised November estimate of 872,000 and is 19.6% above the December 2013 rate of 775,000.

Single-family housing completions in December were at a rate of 667,000; this is 9.5% above the revised November rate of 609,000. The December rate for units in buildings with five units or more was 254,000.