New residential construction in the U.S. pulled back sharply in the month of March, according to a report released by the Commerce Department on Tuesday, although the report also showed a rebound in building permits.

The report said housing starts plunged by 6.8 percent to an annual rate of 1.215 million in March from an upwardly revised 1.303 million in February.

Economists had expected housing starts to drop by 2 percent to a rate of 1.262 million from the 1.288 million originally reported for the previous month.

The bigger than expected decrease in housing starts reflected notable declines in both single-family and multi-family starts.

Single-family starts tumbled by 6.2 percent to a rate of 821,000, while multi-family starts slumped by 7.9 percent to a rate of 394,000.

The report also showed steep drops in housing starts in the Midwest and West, where starts plummeted by 16.2 percent and 16.0 percent, respectively.

Housing starts in the South also fell by 2.9 percent, although housing starts in the Northeast surged up by 12.9 percent.

Meanwhile, the Commerce Department said building permits, an indicator of future housing demand, jumped by 3.6 percent to a rate of 1.260 million in March from a revised 1.216 million in February.

Building permits had been expected to climb by 3.1 percent to a rate of 1.250 million from the 1.213 million that had been reported for the previous month.

Multi-family permits led the way back to the upside, jumping by 13.8 percent to a rate of 437,000 in March after plummeting by 21 percent to a rate of 384,000 in February.

On the other hand, the report said single-family permits slid by 1.1 percent to a rate of 823,000 in March from a rate of 832,000 in February.

Building permits in the West, Northeast, and South saw notable increases during the month, while building permits in the Midwest fell sharply.

On Monday, the National Association of Home Builders released a report showing a bigger than expected pullback in homebuilder confidence in the month of April.

The report said the NAHB/Wells Fargo Housing Market Index dropped to 68 in April after jumping to 71 in March. Economists had expected the index to edge down to 70.

The bigger than expected decrease by the index came after it reached its highest level since June of 2005 in the previous month.

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