The housing market recovery has stalled as a combination of higher mortgage rates and rising property prices, against the backdrop of stagnant wage growth, makes housing less affordable for many Americans. A cold winter also weighed on activity.
The residential sector contracted in the first three months of 2014, declining for a second consecutive quarter.
With the multi-family sector segment continuing to drive residential construction, housing is unlikely to contribute to economic growth this year for the first time since 2010.
Last month, groundbreaking for single-family homes, the largest segment of the market, rose 0.8 percent to a 649,000-unit pace. Starts for the volatile multi-family homes segment surged 39.6 percent to a 423,000-unit rate.
Permits to build homes jumped 8.0 percent to a 1.08-million unit pace in April, the highest since June 2008. Economists had expected permits to rise to a 1.01-million unit pace.
Permits for single-family homes rose 0.3 percent to a 602,000-unit pace.
Single-family homes permits continue to lag groundbreaking, suggesting that single-family starts could decline in the months ahead to bring them in line with permits.
A survey on Thursday showed confidence among single-family home builders slipped to a one-year low in May.
Permits for multi-family homes soared 19.5 percent to a 478,000-unit rate in April.