(Bloomberg) -- New home construction in the US slowed last month as a leveling off in interest rates has given way to a lull in housing demand and caution among builders.

Residential starts decreased 14.7% in March to a 1.32 million annualized rate, the lowest since August, government data showed Tuesday. The figure was weaker than all estimates in a Bloomberg survey of economists.

Building permits, which point to future construction, fell to a 1.46 million rate in March. Both starts and permits were revised higher in February.

Single-family home construction dropped by the most in about three years, while the pace of multifamily starts sank to lowest since the onset of the pandemic. Permits for both also fell.

After ramping up construction in recent months, builders may be taking a breather. The inventory of new homes for sale is near the highest since 2008.

The housing starts report showed that the number of single-family homes already under construction rose to the highest since May, so builders may not be looking to break ground on more homes. Similarly, completions fell, signaling that builders are focused on current projects.

The figures represent a blemish in the nation’s recovery in the housing market. Mortgage rates have largely stabilized around 7%, and prospective buyers and sellers are only slowly coming around to accept this as the new normal.

The sentiment is similar among builders, as an industry group metric leveled off in April, citing hesitation among buyers as they try to gauge the direction of mortgage rates. Given recent robust readings on inflation and the job market, investors aren’t hopeful that the Federal Reserve is close to cutting interest rates.

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Economists will get a fuller look at the housing market with the upcoming releases of new- and existing-home sales in March in the coming days.

--With assistance from Chris Middleton, Vince Golle and Christopher Condon.

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