New-home construction fell 15.5 percent from November to December, to an annual pace of 550,000, the slowest pace on record, the Commerce Department reported on Thursday. Home builders have all but shut down projects as home values plunge and potential buyers stay on the sidelines of the troubled housing market. What you’re seeing is capitulation by home builders, said John Lonski, chief economist at Moody’s Capital Markets. The news you got today reinforces the view that stabilization of housing starts is well off into the future. — NY Times

Update: A reader nicely sent in the above graph from Citigroup. Click to view a larger version.