(RTTNews) - After reporting a substantial increase in new residential construction in the U.S. in the previous month, the Commerce Department released a report on Thursday showing housing starts pulled back by much more than expected in the month of August.
The report said housing starts tumbled by 5.1 percent to an annual rate of 1.416 million in August after soaring by 17.9 percent to a revised rate of 1.492 million in July.
Economists had expected housing starts to pullback by 1.2 percent to a rate of 1.478 million from the 1.496 million originally reported for the previous month.
The bigger than expected decrease came as a steep drop in multi-family starts more than offset a continued increase in single-family starts.
Multi-family starts plunged by 22.7 percent to an annual rate of 395,000, while single-family starts jumped by 4.1 percent to a rate of 1.021 million.
The Labor Department said building permits also fell by 0.9 percent to an annual rate of 1.470 million in August after spiking by 17.9 percent to a revised rate of 1.483 million in July.
Building permits, an indicator of future housing demand, had been expected to increase by 1.7 percent to a rate of 1.520 million from the 1.495 million originally reported for the previous month.
The unexpected pullback came as multi-family permits tumbled by 14.2 percent to an annual rate of 434,000, more than offsetting a 6.0 percent surge in single-family permits to a rate of 1.036 million.
On Wednesday, the National Association of Home Builders released a separate report showing homebuilder confidence jumped to a record high in September.
The report said the NAHB/Wells Fargo Housing Market Index shot up to 83 in September from 78 in August. Economists had expected the index to come in unchanged.
With the unexpected increase, the index rose to its highest level in the 35-year history of the series, surpassing the previous record high of 78 that was set last month and also matched in December 1998.