The pace of U.S. housing construction slowed more than expected in March as both the rate of starts and permits declined to their lowest levels in a year, the government said Tuesday in a report suggesting further cooling in the market.

The Commerce Department said March housing starts fell 7.8 percent to a 1.960 million unit pace from an upwardly revised 2.126 million unit rate in February.

Economists had expected groundbreaking on new homes to ease to a 2.030 million unit pace from February's originally reported rate of 2.120 million units.

More sluggish single-family home construction easily offset strength in the pace of groundbreaking on multifamily units, the report showed.

New construction of single-family homes fell 12 percent to a 1.591 million unit pace after dropping 2.3 percent in February to a 1.807 million unit rate. Multifamily starts rose 15.7 percent to a 369,000 unit pace after tumbling a revised 30.3 percent in February.

Permits for future groundbreaking, an indicator of builder confidence, dropped 5.5 percent in March to a 2.059 million unit pace from February's 2.179 million unit rate, the Commerce Department said. That was slower than economists' forecasts of a 2.100 million unit pace in March permits.

After a years-long rally that shattered construction and sales records, the U.S. housing market has been easing as mortgage rates rise. Many economists expect housing to continue to cool through the year, but say 2006 should still be the third best year on record for the market.

Housing starts declined throughout the United States, down 15.5 percent in the West, 8.2 percent in the Midwest, 4.8 percent in the South and 0.5 percent in the Northeast.

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