Housing starts slumped in August from the highest level in almost seven years in the United States, reflecting a setback in multifamily projects that are at the forefront of the rebound in real estate. Beginning home construction fell 14.4 per cent, the most since April last year, to a 956,000 annualised rate following July's revised 1.12 million pace that was the strongest since November 2007, the Department of Commerce said. Work on apartments and condominiums, which tends to be volatile, dropped 31.7 per cent after jumping 44.9 per cent in July. As more Americans decide that homeownership is not for them because wage growth is slow and qualifying for mortgages remains difficult, builders have focused on homes for rent, which means the industry will see bigger swings month to month. The average number of multifamily units started over the past 12 months was the most since 2006. "There's been a fairly compelling recovery in multifamily construction because people need apartments to live in; on the other hand, there's been significantly less recovery in the single-family market," said Ward McCarthy, chief financial economist at Jefferies in New York. The construction figures "will continue to improve, but it's going to continue to be an erratic improvement". Over the past 12 months, construction has been started on an average of 349,000 multifamily structures, the most since the same period ended July 2006. Starts of single-family properties declined 2.4 per cent to a 643,000 rate in August from the previous month. They have averaged 630,000 over the past 12 months. While that is up from the depths of the economic slump, excluding the recession and subsequent recovery, the reading would be the weakest since 1982. A slowdown in homeownership in the wake of the housing bubble that coincided with the last recession points to further gains in building of rental properties, according to McCarthy. The commerce department's construction report showed permits for future projects dropped 5.6 per cent to a 998,000 pace last month from a 1.06 million rate in July. The median estimate in a survey of 78 economists called for a 1.04 million pace of starts. Forecasts ranged from 995,000 to 1.12 million after a previously reported 1.09 million in July. All four regions showed a decrease in groundbreaking last month, led by a 24.7 per cent drop in the West that was the biggest since November 2012. The figures were at odds with a recent report showing builder confidence rose this month to the highest level since 2005. The National Association of Home Builders/Wells Fargo said its sentiment measure climbed to 59 from 55 in August. Readings above 50 mean more respondents said conditions were good.