New home construction fell again in December as builders scramble to cut back in the face of rising inventories and fewer orders. The drop-off is likely to hurt businesses that serve the housing industry, which economists do not expect to bottom out until the middle of the year.

Groundbreakings remain at the lowest level in more than 16 years, and permits for new residential construction projects recorded their slowest month since the housing recession of the early 1990s, the Commerce Department said on Thursday.

Housing starts fell by 14 percent last month, to an annual rate of 1.006 million, seasonally adjusted. Residential construction dropped nearly 40 percent in 2007 as a whole.