U.S. Housing Starts Drop Nearly 6%

Builders broke ground on new homes last month at an annual rate of 654,000 units compared with a revised pace of 694,000 units in February, the Dept. of Commerce says.

Last month's decline was caused by a 71% drop in starts on multifamily homes to an annual rate of 192,000 units. Starts of single-family homes were nearly flat at 462,000 units.

The large supply of existing houses, which has been inflated by foreclosures, is offsetting the benefits of lower interest rates and rising employment, according to economists. The result, they say, is that home construction may not contribute much to the American economy this year.

Analysts say the weak housing market and the resulting drag on consumer confidence, is keeping a damper on U.S. auto sales.

Building permits, a gauge of future construction, rose 4.5% to a 747,000-unit annual rate in March, the highest since September 2008. The increase came from a 21% jump in permits for multifamily housing.