New home construction in the United States dialed back sharply in April, falling 9.5 percent after the prior month saw strong growth, government data said Tuesday.

The seasonally adjusted data on new home starts was worse than expected, while building permits, a more volatile indicator of projects in the pipeline, rose 0.3 percent from March.

Homebuilders have faced tough months recently, with bad winter weather idling many projects in February followed by a large rebound in March construction.

Ian Shepherdson of Pantheon Macroeconomics said the decline in homebuilding was part of a generalized cooling of the housing market after booming last year amid the Covid-19 pandemic and low mortgage rates.

"As the rest of the consumer-facing economy rebounds dramatically, the housing market -- both sales volumes and construction activity -- is set to struggle over the next few months," Shepherdson said.

April housing starts fell to an annualized rate of nearly 1.57 million, due to contractions of 34.8 percent in the Midwest and 11.5 percent in the South, while starts grew 6.2 percent in the Northeast and nine percent in the West.

US homebuilding declined in April, perhaps a sign of a wider cooling for the housing market after a surge in demand amid the Covid-19 pandemic
US homebuilding declined in April, perhaps a sign of a wider cooling for the housing market after a surge in demand amid the Covid-19 pandemic AFP / Chris DELMAS

Single-family housing accounted for the decrease in overall starts, with construction declining 13.4 percent from March. Multi-family housing construction rose four percent.

Nonetheless, starts were 67.3 percent higher than in April 2020, when the Covid-19 pandemic greatly curbed business across the world's largest economy.

The seasonally adjusted annual rate of 1.76 million seen in permits was in line with forecasts, and units of five or more saw growth of 11.1 percent, accounting for the bulk of the increase.

Permits for single-family homes fell 3.8 percent, and housing with two to four units dropped 10.3 percent.

Despite the underwhelming data, Nancy Vanden Houten of Oxford Economics predicted housing starts would end the year in the 1.6 million range, its strongest pace since 2006.

"Strong demand, a need for inventory and homebuilder optimism will support housing starts over the rest of 2021, while record-high lumber prices and supply chain bottlenecks may act as headwinds," she said in a note.

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