NEW YORK - May 17, 2011 - U.S. housing starts and permits for future home construction fell in April as an overhang of homes on the market discourages builders from taking on new projects, pointing to prolonged weakness in the housing sector.

The Department of Commerce said on Tuesday housing starts dropped 10.6% to a seasonally adjusted annual rate of 523,000 units.

March’s starts were revised up to a 585,000-unit pace from the previously reported rate of 549,000 units.

Economists polled by Reuters had forecast housing starts rising to a 568,000-unit rate. Compared to April last year, residential construction was down 23.9%, the largest decline since October 2009.