Utah's housing boom officially came to an end late last year as residential permits took a nosedive.

In December, permits issued for new houses, condominiums and apartments across the state fell to 1,551 units, a 21.1 percent drop from the number of permits issued during the same month in 2005, according to a report from the University of Utah's Bureau of Economic and Business Research.

December's sluggish numbers followed a weak November, when residential permits dropped 24.7 percent. In October, permits were up 2.1 percent, but August and September also showed double-digit declines.

The monthly declines left total residential permits for the year at 26,322 units, a 6.9 percent drop from 2005's record 28,285 permits. The 2006 decline was nearly two percentage points higher than the preliminary 5 percent drop predicted earlier this year by Gov. Jon Huntsman Jr.'s economic advisers.

Permits in Herriman were down 52 percent in 2006 compared to 2005, while Riverton saw new permits fall by 29 percent. Salt Lake City permits dropped 69 percent. St. George saw a 43 percent decline, and West Jordan witnessed a 36 percent decrease.

James Wood, director of the U. bureau, predicts that permits in 2007 will be down another 10 percent.

"2005 was definitely the peak," Wood said. "There were definitely signs of a retreat in 2006. It started to weaken in August."

Wood said part of the decline going forward can be blamed on demographics.

"We don't have as many young kids forming households — 25- to 29-year-olds," Wood said. "What drives demand for housing is household formation. In-migration can offset that."

Wood said fewer homes being built could affect the state's economy, where one out of four jobs created in recent years has been in the construction industry. But the current downturn likely will mirror a similar cycle that occurred in the late 1990s, where residential building permits dropped by nearly 25 percent over a four-year period, he said.

Two other housing downturns in Utah during the 1970s and 1980s were more severe. Each of those housing busts saw the number of residential permits fall by 70 percent. Wood said those downturns were aggravated by high mortgage interest rates.

Jeff Thredgold, president of Salt Lake-based Thredgold Economic Associates and a consultant to Zions Bank, believes current interest rates should stay at historically attractive levels, which should support the housing market.

"Part of the decline in 2006 was that prices jumped roughly 20 percent in our market," Thredgold said. "There are people at the margin that might have qualified before who didn't qualify when prices went up. It's a kind of shrinking of the possible buyer pool as prices jump sharply."