New residential construction in the U.S. dropped for the seventh straight month in January, with the number of housing starts and building permits falling far below economists’ estimates alongside a continually contracting job market.

According to the U.S. Commerce Department, the number of privately-owned housing starts declined to a seasonally-adjusted annual rate of 466,000 in January, a 16.8 percent decrease from the revised December figure of 560,000.

Housing starts fell 56.2 percent in the last year, down from 1,064,000 in January 2008. The measure includes the total number of new residential buildings that have begun construction by at least excavating for a foundation.

In January, the number of building permits for privately-owned homes fell to a seasonally-adjusted annual rate of 521,000, a 4.8 percent decrease from 547,000 in December. Building permits decreased 50.5 percent since January 2008, when the rate totaled 1,052,000.

“It’s the pace of jobs that fuels the demand for housing, and with job growth falling off a cliff, there’s incrementally no demand,” said Jack Ablin, chief investment officer at Chicago’s Harris Private Bank.

According to Bloomberg L.P., surveyed economists predicted that housing starts would fall to 529,000 in January, and building permits to 525,000.

“I’m definitely not surprised,” said Daniel P. McMillen, a visiting professor of economics at the University of Illinois at Urbana-Champaign. “This recession has been so closely tied to the housing market, and there was so much building going on beforehand. Combine a normal recession with excess inventory and there you have it.”

Experts attribute the plunging construction numbers—the lowest ever on record, according to Ablin—to an unstable labor market, which is directly tied to the housing market and people’s variable willingness to invest in real estate. Since the recession began in December 2007, payroll employment in the U.S. has declined by 3.6 million jobs, according to the Bureau of Labor Statistics.

“I think the lowering in expectations is due to the fact that the housing market is under a lot more stress than we can conceive of,” said David Crowe, chief economist at the National Association of Home Builders. “Clearly the employment market is having its effect on people’s ability to purchase a home. Jobs are not secure, so people are having second thoughts whether or not to buy now.”

In the Midwest, housing starts and building permits figures have dropped slightly more than the national rate during the past year. There were 53,000 housing starts in the region in January, a 66 percent slump from 156,000 starts the year earlier. In January, there were 82,000 permits issued in the Midwest, a 54.4 percent year-over-year decrease from 180,000.

“Yes, it’s terrible, but it’s what we need,” Ablin said. “The last thing we need is new supply [of housing] when we’ve already got a surplus. Thankfully Chicago’s avoided most of the boom and a fair amount of the bust. We've seen some pretty high-profile flops, but for the most part I think the city’s navigated this turbulence pretty well.”

The figures were released on the same day that President Barack Obama announced a $75 billion commitment to help stem foreclosures, part of the economic recovery bill that he signed into law on Monday.

Crowe said there were some other incentives in the stimulus package designed to bring new buyers into the housing market, such as an $8,000 first-time home buyer tax credit that will give people “a reason to want to move now instead of later.” Regardless, he said, the process of reversing the current construction slump will still take a considerable amount of time.

“The numbers will eventually rise, but not immediately,” he said. “It will take a while for the job part to kick in, and for people to know about available credit, and this effort to stop foreclosures. Eventually there will be fewer homes and then less competition for new properties. All those things have to fall into place before we can see a turnaround in production.”