U.S. housing starts (search) surged 11.0 percent in April, topping expectations, as ground-breaking on both single-family and multifamily homes recovered after a plunge in March, a Commerce Department (search) report showed Tuesday.

April housing starts picked up to a 2.038 million unit rate from a downwardly revised 1.836 million unit pace in March as the housing market, buoyed by still-low lending rates, showed few signs of flagging despite a string of interest-rate increases from the Federal Reserve (search) begun last June.

Wall Street economists had expected housing starts to rise by a smaller 7.8 percent in April to a 1.980 million unit rate after tumbling 17.6 percent to the 1.837 million unit pace initially reported for March.

Single-family housing starts increased 6.3 percent to a 1.635 million unit rate after falling 14.9 percent to a 1.538 million unit pace in March. Starts on housing with two or more units jumped 35.2 percent in April following a 29 percent drop the previous month.

Permits for future groundbreaking, an indicator of builder confidence, rose 5.3 percent to a 2.129 million unit clip in April. Analysts had forecast permits would edge up just 0.6 percent to a 2.038 million rate from the revised 2.025 million unit rate reported the prior month.

In the U.S. South, groundbreaking soared 25 percent, marking the biggest advance for that region since a 29.5 percent increase in July 1995. Starts rose 6.2 percent in the Midwest and 2.5 percent in the West but fell 17.8 percent in the Northeast, the Commerce Department said.

Low mortgage rates have supported the housing sector despite short-term interest rate increases by the Federal Reserve.

The average 30-year fixed-rate mortgage was 5.77 percent in the week ended May 12, up from the previous week but below the 6.34 percent rate seen a year ago, according to mortgage finance company Freddie Mac.

The National Association of Realtors (search) expects fixed, long-term rates to stand at 6.2 percent at the end of 2005 while the Mortgage Bankers Association's (search) chief economist has forecast 30-year fixed rates will rise to 6.5 percent to 6.6 percent.