WASHINGTON - June 16, 2010 - Home construction plunged last month to the lowest level since December as builders scaled back without a federal tax credit to lure buyers. Building permits also fell, a sign the construction industry isn't fueling an economic recovery.

The Commerce Department said Wednesday that construction of new homes and apartments fell 10% from a month earlier to a seasonally adjusted annual rate of 593,000. April's figure was revised downward to 659,000.

The results were driven by a 17% decline in the single-family market, which had benefited earlier in the year from federal tax credits of up to $8,000. It was the largest monthly drop in single-family construction since January 1991.

Applications for new building permits, a sign of future activity, also fell. They sank 5.9% to an annual rate of 574,000, the lowest level in a year.

The report missed Wall Street expectations by a wide margin. Economists surveyed by Thomson Reuters had predicted that housing construction would only fall to a seasonally adjusted annual rate of 650,000 and had forecast that building permit applications would increase to an annual rate of 630,000.