Housing starts dropped to a seasonally adjusted annual rate of 654,000, compared with a revised figure for February of 694,000.
The rate of single-family housing starts in the month was 462,000, which was 0.2 percent below the revised annual rate for February of 463,000.
For multiple-unit housing starts -- projects with five or more living units -- the annual rate in March came to 178,000.
Permits issued for privately owned housing units rose 4.5 percent month to month to an annual rate of 747,000. A year earlier in March, the annual rate for permits issued stood at 574,000. The new rate is a 30.1 percent climb over the rate 12 months prior.
Permits issued are an indicator of what direction construction starts might take one or two months down the road.
Completed housing projects in March were estimated at a seasonally adjusted annual rate of 600,000, which is 4.2 percent above the revised figure for February of 576,000 units and 0.5 percent above March 2011 when 597,000 housing completions were posted.