And applications for new construction reached a five-year peak, evidence that the housing revival will be sustained.
The Commerce Department said Thursday that builders started construction at a seasonally adjusted annual rate of 853,000, a 16.5 per cent drop from the March pace of 1.02 million. Applications for building permits rose 14.3 per cent to a rate of 1.02 million, the most since June 2008.
Builders are benefiting from a sustained rebound in housing that began a year ago. Steady job growth, rock-bottom mortgage rates and rising home values have boosted demand.
New construction of single-family homes declined 2.1 per cent in April to an annual rate of 610,000. Multi-family construction, which is volatile, plunged 39 per cent to a rate of 243,000. That drop more than reversed a 26 per cent surge in March.
Housing starts fell last month in every region except the Midwest, where it rose 11 per cent compared with March. New construction dropped 28 per cent in the South. It fell 13 per cent in the Northeast and 6 per cent in the West.
Even with the sharp drop in construction last month, confidence among builders is rising. The National Association of Home Builders says its builder confidence index rebounded in May to a reading of 44, up from 41 in April. The outlook for sales reached its highest point in more than six years.
New-home sales rose 1.5 per cent in March to a seasonally adjusted annual rate of 417,000. That's still below the 700,000 pace considered healthy. But sales are 18.5 per cent higher than a year ago.
Several major homebuilders have reported strong annual increases in orders for the first three months of the year. That includes the start of the spring home-selling season, the traditional peak period for sales.
Ryland Group Inc. said this week that orders in April jumped 59 per cent from a year earlier. And over the first three months of this year. orders have jumped 54 per cent.
Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the homebuilders' group.