A 13% decline to an annual rate of 458,000 was led by a 46% decline in multi-family starts, compared to March when builders broke ground on 525,000 homes.

Building permits, which are a sign of future construction fell by 3.3% to a record low rate of 494,000 and taken together the two declines suggest that house prices have not yet reached rock-bottom.

So called experts had forecast an increase to a 520,000 annual pace from a 510,000 previously estimated pace the prior month, and they also forecast that building permits would increase to 530,000 annual rate.

But to give credit where it’s due, Maxwell Clarke, who is the chief U.S. economist at IDEAglobal Inc said even before the report came out that, “Weakness in housing continues. Declining prospects for developers should continue to act as a drag on investment and overall output in 2009″.

Overall the housing market is showing some signs of stabilization and confidence amongst U.S. homebuilders in May increased to the highest level since September, and although sales of new homes are still 70% below their 2005 highs, they have risen slightly from their record January lows.

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Moreover, applications for building permits, which are generally considered to be a reliable sign of future activity, also rose in February by 3% to an annual rate of 547,000.

The number of new housing projects that builders broke ground on was mostly in apartment construction and came in spite of forecasts by analysts that there would be a drop in construction to around 450,000 units.

Figures contained in a report by Credit Suisse last month indicate that over two million American homebuyers faced foreclosure proceedings last year, and it’s thought likely that the number could rise to around ten million over the next two to three years.

Many would be buyers have been unable to obtain mortgages due to the tighter lending standards brought about by the credit crisis and unemployment is at a twenty five year high of 8.1%.

The National Association of Home Builders’ housing market index was flat for March at a reading of just nine points, being just one point above January’s all time low. The figure has been below ten since November with any number below fifty being a negative one.

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