Housing Starts See Biggest Drop Since April 2013, Permits Fall

U.S. housing starts and permits fell in August, but upward revisions to the prior month's data suggested the housing market continued to gradually improve.

Groundbreaking declined 14.4 percent to a seasonally adjusted annual 956,000-unit pace, the Commerce Department said on Thursday. July's starts were revised to show a 1.12-million unit rate, the highest level since November 2007, instead of the previously reported 1.09-million unit rate.

Economists polled by Reuters had forecast starts slipping to a 1.04-million unit rate last month.

Housing is clawing back after suffering a setback following a spike in mortgage rates last year. It, however, remains constrained by a relatively high unemployment rate and stringent lending practices by financial institutions.

A survey on Wednesday showed homebuilder sentiment hit its highest level in nearly nine years in September and builders reported a sharp pick-up in buyer traffic since early summer.

Groundbreaking for single-family homes, the largest part of the market, fell 2.4 percent in August to a 643,000-unit pace. That followed a hefty 11.1 percent increase in July.

Starts for the volatile multi-family homes segment tumbled 31.7 percent to a 313,000-unit rate in August.

Last month, permits fell 5.6 percent to a 998,000-unit pace. July's permits were revised slightly up to a 1.06-million unit rate. Economists had expected them to dip to a 1.05-million unit pace in August.

Permits for single-family homes fell 0.8 percent to a 626,000-unit pace in August. Permits in the U.S. South, where more than half of single-family construction occurs, hit their highest level since April 2008.

Permits for multi-family housing declined 12.7 percent to a 372,000-unit pace.