NEW YORK (CNNMoney) -- New home construction tumbled in April, the government said Tuesday, as the nation's housing market remains weak.
Housing starts, the number of new homes being built, fell 10.6% in April to an annual rate of 523,000 units, down from a revised 585,000 in March, the Commerce Department said.
Economists had expected an annual rate 563,000 units, according to consensus estimates from Briefing.com.
The report also said there were 551,000 building permits issued in April. That's down 4% from 574,000 permits in March, and was also fewer than expected.
Building permits were forecast to have increased to an annual rate of 590,000 units.
The weakness in both housing starts and building permits last month was due largely to declines in construction of multi-family homes, which is often volatile.
Construction of homes with five or more units fell 28% in April versus the month before, according to the report. That compares with a 5.1% drop in construction of one-unit homes.
While construction showed some resilience in March, the market for new homes has been stifled by a glut of foreclosed properties.
In addition, the overall housing market has been hindered by high levels of unemployment, despite a modest pick up in hiring this year. Homebuilders have also had trouble financing projects, as credit remains tight.
"The underlying trends, as far as we can tell, are about flat, at a very low level, having dropped at the turn of the year," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
Shepherdson said construction won't recover until new home sales start to pick up, which hasn't happened yet. But he said an increase in home buyer traffic over the past two months was "positive."
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