The pace of housing starts unexpectedly fell by 1.6% to an annualized rate of 1.028 million units.
Economists were expecting 1.04 million.
Building permits plunged 5.2% to 1.035 million.
“Overall, this was a disappointing report and it further underscores that the ongoing narrative of the housing sector recovery continuing to struggle for direction,” TD Securities’ Millan Mulraine said. “Nevertheless, with labour market conditions continuing to be favourable and buying conditions remaining very attractive, we believe that it will be only a matter of time before the housing recovery shifts up a gear or two and provide a crucial second wind to the economic recovery.”