Housing starts fell sharply in February, dropping the most in a single month since 1984, the U.S. Census Bureau reports. The 23% retreat left starts at an annualized rate of 479,000 in February, or just above the previous low for this cycle—477,000 in April 2009. It’s unclear if starts are headed for new lows, but the possibility surely went up a notch or two in light of today’s numbers.

The drop in starts is all the more dramatic considering January’s 18% surge—the best monthly gain in nearly two years. But in the wake of today’s update, it looks like the January revival was a one-off number. More ominiously, the new report suggests that apparent stability in housing starts may be eroding. The key question: Is the housing market poised for a new leg down?

The weakening trend in new building permits only strengthens the case for thinking that housing will continue to struggle in the months ahead. Permits fell 8% in February, with the annualized tally for the month at 517,000, the lowest on record for this series, which dates to 1960. As a leading indicator for the housing market, the latest drop in permits leaves little room for optimism on the prospects for a revival in the foreseeable future.
The basic problem is still the ongoing ample supply of existing homes for sale. “At this point new homes are likely to continue to lose to existing homes because distressed properties pose a better bargain for buyers,” Millan Mulraine, senior U.S. strategist at TD Securities, tells Bloomberg. “We’re not seeing a strong rebound in the horizon because permit approval is just marginally above starts.”