The Commerce Department said housing starts rose 1.7 percent from June to a seasonally adjusted annual rate of 546,000 units in July. That was weaker than the 555,000 seasonally adjusted pace some economists had expected, Marketwatch said.
The 546,000 starts in the month was a decline from June's revised estimate of 537,000 annualized units, and the lowest level since October.
Housing starts fell 22 percent after a tax break for new home buyers expired in May.
"Today's data show that new housing activity appears to be stabilizing in the wake of the expiration of the home buyer tax credit," said Commerce Secretary Gary Locke.
Building permits were down 3.1 percent on a seasonally adjusted basis to 565,000 in July, with permits for single-family homes down 1.2 percent to a 416,000 annualized rate, the Commerce Department said. Permits for apartments and condominiums were down 8 percent to 149,000 annualized units.
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