U.S. housing starts unexpectedly fall for second straight month

WASHINGTON (Reuters) - U.S. homebuilding unexpectedly fell in April amid a persistent decline in the construction of multi-family housing units and a modest rebound in single-family projects, pointing to a slowdown in the housing market recovery.

Housing starts dropped 2.6 percent to a seasonally adjusted

annual rate of 1.17 million units, the Commerce Department said

on Tuesday. That was the lowest level since last November and

followed a downwardly revised rate of 1.20 million units in

March.

Economists polled by Reuters had forecast groundbreaking

activity rising to a rate of 1.26 million units last month from

a previously reported rate of 1.22 million units in March.

Homebuilding increased 0.7 percent on a year-on-year basis.

Single-family homebuilding, which accounts for the largest

share of the residential housing market, rebounded 0.4 percent

to a pace of 835,000 units last month. That left the bulk of the

5.1 percent decline in March intact.

Single-family starts surged 19.4 percent in the Midwest and

advanced 9.1 percent in the West. They fell 3.4 percent in the

South and tumbled 29.2 percent in the Northeast.

Some of the drop in starts, especially in the Northeast, could be weather-related after a snowstorm lashed the region in

March. Demand for housing remains underpinned by a tightening

labor market, characterized by an unemployment rate at a 10-year

low of 4.4 percent.

A survey on Monday showed homebuilders' confidence rose in

May, with bullishness about current sales and over the next six

months.

Last month, starts for the volatile multi-family housing

segment dropped 9.2 percent to a pace of 337,000 units. Multi-

family starts have declined for four straight months.

Building permits fell 2.5 percent, driven by a 4.5 percent

drop percent in the single-family segment. Multi-family permits

rose 1.4 percent.

(Reporting by Lucia Mutikani; Editing by Paul Simao)