Housing starts in the United States unexpectedly rose last month, but building permits dropped to their lowest in almost a decade, signaling that the increase in construction may be short-lived.

Builders broke ground for new dwellings at an annual rate of 1.528 million in April, a 2.5% increase from the revised 1.491 million rate the previous month, which was weaker than previously estimated, the Commerce Department said Wednesday.

Building permits slumped 8.9%, to a 1.429 million pace, the lowest since June 1997.

Some buyers are delaying purchases in anticipation of a drop in home prices as stricter lending guidelines and subprime mortgage defaults add to the glut of unsold properties, economists said.

Starts were projected to fall to a 1.48 million pace in April, from an originally reported 1.518 million the previous month, according to the median forecast of 80 economists surveyed by Bloomberg News.

The decline in permits was the biggest since February 1990.

Permits, an indicator of future construction, were expected to drop to 1.52 million, from 1.564 million, according to the median estimate.

Construction of single-family homes rose 1.6% last month, to a 1.225 million rate, the highest this year, Wednesday's report said.

Work on multifamily homes, such as townhouses and apartment buildings, increased 6.3%, to an annual rate of 303,000.

The increase in housing starts was led by a 31% jump in the Northeast and a 7.8% gain in the West. Starts fell 14% in the Midwest and were down 0.1% in the South.

The number of homes under construction fell 0.5%, to a 1.188 million pace, the report said. Housing completions dropped 5.8%, to an annual rate of 1.523 million.

The number of housing units authorized, but not yet started, fell 6.1%, to 200,900, the Commerce Department reported.

Toll Brothers Inc., the largest U.S. luxury home builder, said May 9 that profit in the quarter ended April 30 was lower than earlier predicted and that it will miss its full-year earnings target.

"Twenty months into this housing downturn, we continue to face difficult conditions in most of our markets," chief executive officer Robert Toll said.

The National Association of Realtors last week slashed estimates for new and existing-home sales this year and in 2008.

It also said prices of existing homes will fall more than it had previously forecast and that new homes' median price will decline this year for the first time since 1991.

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