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US housing starts plunge, building permits hit one-year low

[WASHINGTON] US housing starts fell more than expected in March and permits for future home construction hit a one-year low, suggesting some cooling in the housing market in line with signs of a sharp slowdown in economic growth in the first quarter.

Groundbreaking decreased 8.8 per cent to a seasonally adjusted annual pace of 1.09 million units, the lowest level since October, the Commerce Department said on Tuesday. February's starts were revised up to a 1.19 million-unit rate from the previously reported 1.18 million-unit pace.

Economists polled by Reuters had forecast housing starts slipping to a 1.17 million-unit pace last month.

Last month's drop in groundbreaking pointed to a moderation in housing market activity and mirrors other data such as business spending, trade and retail sales that have suggested economic growth stalled in the first quarter.

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The economy has been slammed by a strong dollar and weak global demand, which have weighed on exports. Lower oil prices are also a drag as they have undercut profits of energy firms, causing a sharp decline in spending on capital projects.

Still, housing market fundamentals remain strong against the backdrop of a buoyant labor market, which is increasing employment opportunities for young adults, and in turn boosting household formation.

Last month, groundbreaking on single-family housing projects, the largest segment of the market, tumbled 9.2 per cent to a 764,000-unit pace, the lowest since October.

Single-family starts fell in all four regions last month, sliding 4.9 per cent in the South, where most home building takes place. Housing starts for the volatile multi-family segment declined 7.9 per cent to a 325,000-unit pace.

Building permits dropped 7.7 per cent to a 1.09 million-unit rate last month, the lowest level since March last year. Permits for the construction of single-family homes decreased 1.2 per cent in March, while multi-family building permits plunged 18.6 per cent.