Single-family housing starts plummeted in 2011, but construction workers are finding jobs anyway by migrating to multifamily projects. In crises past, an improved homebuilding sector led the U.S. economy into recovery, but markets across the country are bulging with a shadow inventory of roughly 6.6 million homes underlying delinquent or already foreclosed mortgages, according to Lender Processing Services (LPS) data. As a result, new homebuilding continues to decline. Housing starts fell 4.1% in December, the Commerce Department said Thursday. But, employment in the construction sector is actually healing. "Many in construction have found or are looking for jobs in other sectors. Some uptick in residential remodeling and multifamily has employed a few more workers," National Association of Home Builders Chief Economist David Crowe said Thursday. According to the Bureau of Labor Statistics, the unemployment rate for construction workers was 16% at the end of 2011, down from 21.8% at the beginning of the year and a high of 27.1% at the start of 2010. The Commerce Department said Thursday the number of multifamily units completed in December climbed 47% from the year before and up 51.5% from just the previous month. Kermit Baker, chief economist at the American Institute of Architects said banks are still hesitant to expose their investments to real estate again, keeping single-family projects quiet. But the government-sponsored enterprises are funneling more cash into the multifamily space. Fannie Mae issued $23.8 billion in multifamily mortgage-backed securities in 2011, up 45% from the year before. NAHB earlier this month reported confidence is on the rise but still far short of a "good" market. Crowe said in a recent report that although the multifamily sector is improving, the economy can't move forward until the inventory of distressed homes is cleared. "Multifamily rental construction is trending upward, and it is definitely the brightest sector in the broader housing market," Crowe said. "However, the entire housing market continues to be very fragile and subject to many external pressures, including an ongoing shortage of financing for new projects." Starts last year totaled somewhere between 600,000 and 650,000, which would be one-third of the projects started in 2010, according to Baker. "Until house prices stabilize, 'underwater' mortgages get resolved, and mortgage delinquencies and foreclosures work their way through the system, the housing market probably can’t fully recover," he said. For single-family housing starts, the numbers appear worse, according to Anthony Sanders, an economist at George Mason University. "I forecast one-unit housing starts in the 500,000 area, perhaps as high as 550,000. The 600,000 number is the proverbial 'bridge too far' given the still constrained credit in the market," Sanders said. His estimate would mean single-family starts were more than halved from the roughly 1.2 million at the end of 2006. Write to Jon Prior. Follow him on Twitter @JonAPrior.