Ground-breaking for new homes plummeted more than expected in April from an almost five-year high, but applications to build new homes shows the housing sector could still contribute to the strengthening economic recovery.

The Commerce Department said on Thursday that starts at building sites for homes fell 16.5 percent last month to a 853,000-unit annual rate. That was below analysts' expectations of a 945,000-unit rate.

The housing recovery, driven by growing demand and record-low mortgage rates, has started to boost other sectors of the economy in the first part of the year.

Builders appear to be ramping up for more construction projects. Newly issued building permits, a gauge of future construction, rose 14.3 percent from a month earlier to an annual rate of 1.017 million, the highest level since June 2008.

Permits for single-family homes, which compromise about two thirds of the total, rose 3 percent to a 617,000-unit rate, the highest since May 2008.

(Reporting By Margaret Chadbourn; Editing by Neil Stempleman)