However, there have been some signs that the steep slide in housing may be coming to an end. For December, new home sales were up 4.8 percent, the second strong monthly gain after a 7.4 percent rise in November.
"This has really been really a buyers' market in spades in 2006, and we're looking for that to swing back to better balance, actually, as we go through 2007. So, if you're a seller in the market, conditions for you are going to be improving," Dave Seiders, chief economist of the National Association of Home Builders, told CBS Radio News.
While those increases were better than expected, analysts cautioned that they were influenced by unusually warm weather in those two months.
The Commerce Department reported that sales of new single-family homes totaled 1.06 million units for all of 2006, down 17.3 percent from the all-time high for sales of 1.28 million units set in 2005.
"I think we're getting back to more of a sustainable pace, with real, genuine home-buyers who want to occupy homes on the buy side," not investors who want to fix up a home and make a profit, said Seiders.
After setting sales records for five straight years, sales of both new and existing homes suffered sharp declines last year, and that has caused ripple effects throughout the whole economy.
Last year's plunge in new home sales was the biggest drop since a 17.8 percent drop since the recession year of 1990.
"In percentage terms, 2006 was down nearly as much as 1990, but in level terms, it was double that easily," said Seiders.
fell by 8.4 percent to an annual rate of 6.48 million units, it was reported Thursday. That was the biggest decline in the sale of previously owned homes since 1989.
The median price of a new home sold in 2006 was up by 1.8 percent from 2005 but that price gain was far lower than the 9 percent jump in new home prices in 2005.
New home sales were up in all parts of the country in December except the West which posted a 4.4 percent drop. Sales rose by 27.3 percent in the Northeast, 26.6 percent in the Midwest and a much smaller 0.3 percent in the South.
There are bargains out there, says the construction industry.
"Builders have been doing a lot to sell homes. They still have pretty big inventories," said Seiders of the NAHB. "We've seen a fair amount of price trimming, but also a lot of non-price sales incentives, like paying your buyer's closing costs."
Separately, the Commerce Department reported that orders to U.S. factories for big-ticket manufactured goods rose in December by the largest amount in three months, led by a huge jump in demand for commercial aircraft and the biggest increase in orders for cars and trucks in more than two years.
New orders for durable goods rose 3.1 percent last month to a seasonally adjusted total of $221.9 billion. The gain followed a 2.2 percent November increase and was the strongest showing since an 8.7 percent September advance.
Orders for commercial aircraft surged by 26.5 percent, reflecting the sizable 212 plane orders that Boeing Co. booked during the month. There also were gains in a number of other industries, providing evidence that manufacturing is working its way through last year's economic slowdown.
The auto sector, which struggled last year with rising gasoline prices and stiff foreign competition, saw a 6.8 percent rise in orders for vehicles and parts, the biggest one-month gain since August 2004.
Excluding transportation, orders for durable goods posted a solid 2.3 percent increase, the best showing in this category since last March and much better than analysts had been expecting.
For all of 2006, new orders rose by 7 percent, a slight slowdown from an 8.6 percent increase in 2005. Orders had risen by 6.9 percent in 2004 after having fallen in 2002 and 2003 as the country was struggling to emerge from the 2001 recession. Manufacturing was the hardest hit sector in the last downturn.
Economic growth slowed to a lackluster 2 percent in the July-September quarter, raising concerns that the steep slump in housing could trigger an outright recession.
However, in recent weeks a number of reports have shown the year ended with stronger-than-expected activity, easing worries about such a general slowdown.