U.S. home construction plunged in August, led by steep decline in the pace of building apartments.

The Commerce Department says construction fell 14.4 percent in August to a seasonally adjusted annual rate of 956,000 homes. This reverses the sharp gains in July when the rate of new construction rose to 1.12 million homes, the highest annual rate since 2007.

Last month's decrease primarily came from builders starting fewer apartment complexes, which plummeted 31.5 percent compared to July. Apartments have propelled much of the growth in residential construction over the past year, but the pace has been volatile from month to month.

In August, the building of single-family houses fell 2.4 percent.

Applications for building permits, a good sign of future activity, dipped 5.6 percent to an annual rate of 998,000.