US Home Construction Falls 5.1% In August After Gains

New homes were started at a seasonally adjusted annual pace of 1.42 million last month after a 17.9% surge in July, the Commerce Department reported Thursday.

While the drop-off in new homes was greater than economists had expected, construction remains 51.6% above an April low.

Also, this week a survey gauging builder sentiment found strong optimism. The survey by the National Association of Home Builders and Wells Fargo showed that builder confidence reached to an all-time high in September, even in the face of rising costs for building materials.

Declines in activity were led by the Northeast, where home construction fell 33.1%. There was also a decline of 17.7% in the South, traditionally a strong region.