Builders broke ground on fewer houses in October as the sales outlook darkened with the looming expiration of a government tax credit and mounting joblessness.

The plunge in starts — to an annual rate of 529,000, the lowest level since April — was not expected. It followed a 592,000 pace the prior month, Commerce Department figures showed Wednesday. Building permits, a sign of future construction, also decreased.

The market may have seized up as builders waited to see if the administration would extend a first-time-buyer incentive that helped lift sales.

"The numbers are shocking," said Patrick Newport, an economist at IHS Global Insight in Lexington, Mass. The decline "represents a payback for the tax credit, which induced builders to build earlier."

Starts on dwellings were projected to rise to a 600,000 annual pace, according to the median forecast of 77 economists surveyed by Bloomberg News. Estimates ranged from 570,000 to 630,000.

Permits, a sign of future construction, dropped to a 552,000 annual pace last month from 575,000. They were forecast to climb to a 580,000 annual rate, according to the survey median.

Construction of single-family houses, which account for 75% of the industry, fell 6.8%, to a 476,000 rate, Wednesday's report showed.

Work on multifamily homes, such as townhouses and apartment buildings, plunged 35%, to an annual rate of 53,000, the lowest on record.

The decrease in starts was led by a 19% slump in the Northeast. Starts were down in all four regions.

Construction may further improve after Obama and Congress extended a tax credit of as much as $8,000 for first-time homebuyers until April 30, from Nov. 30. They also expanded it to include some current owners.

Concern over the pending expiration of the credit earlier this month weighed on builder sentiment. The National Association of Home Builders/Wells Fargo confidence index held at 17 in November for a second month.

Some companies are already seeing a turn. Toll Brothers, the luxury home builder, said last week that orders surged 42% in the quarter that ended Oct. 31 and that cancellations slowed.

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