The pace of U.S. housing construction slowed in April for the third month running as groundbreaking on both single-family and multifamily homes dropped, the government said Tuesday in a report signaling more moderation in the market.

The Commerce Department said April housing starts fell 7.4 percent to a 1.849 million unit annual pace, the lowest level since November 2004, from an upwardly revised 2.00 million unit rate in March.

Economists had expected rising interest rates and growing supply to slow housing starts to a 1.95 million unit pace in April from an originally reported 1.96 million unit pace in March.

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Construction of single-family homes fell 5.6 percent to a 1.54 million unit pace, the third straight monthly decline. Groundbreaking on multifamily units tumbled 15.1 percent, reversing course after March's 15.6 percent jump.

Permits for future groundbreaking, an indicator of builder confidence, dropped 5.4 percent in April to a 1.98 million unit pace. That was the biggest decline in nearly two years and brought permits to their lowest since February 2004. It was also far short of economists' expectations for a 2.045 million unit pace in permitting last month.

The U.S. housing market has shown signs of sustained cooling since mortgage rates began to rise last year. After a five-year rally that shattered sales and construction records, and sent prices soaring across the United States, groundbreaking and purchase activity has eased. Still, many economists see 2006 as the third-best year on record for the market.

Housing starts fell 16 percent in the U.S. South and 9.7 percent in the West but climbed 16.3 percent in the Midwest and 9.1 percent in the Northeast.

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