Construction of new homes in the U.S. rose during November but permits fell surprisingly, according to a report by the U.S. Commerce Department, indicating that the housing market might face some weakness in the coming months.
Housing starts rose 3.9 percent to a seasonally adjusted annual rate of 555,000 units.
Analysts polled by Reuters were expecting a rate of 550,000 units for the month.
However, new building permits fell 4 percent to 530,000 unit pace in November, the lowest seen since April 2009.
Analysts had expected permits to rise to 560,000 unit for the month.
The drop was mainly due to multi-family home segment, which dropped 23 percent. Permits for single homes, however, rose 3 percent in November.
Homebuilders remain cautious about the housing market in the U.S. Despite a rise last month, many people remain wary about making long-term and heavy investments such as houses as the unemployment rate continues to remain around 9.8 percent.
The unemployment is closely linked to consumer confidence and people's ability to spend, which currently remains weak, even if better than last year.
The U.S. Government will mostly complete the $600 billion bond purchase program announced in early November, given the slowing economy. The QE2, as the program is popularly called, is expected to reduce unemployment rate by half a percentage point by 2012.
However, given the number of people entering the job arena, economists believe that the pace of job creation is not enough to offset the high unemployment numbers.
President Obama had a meeting with CEOs of various companies such as UBS AG Chairman for Americas, Motorola Inc and Honeywell International on Thursday to encourage them to hire more people. Companies have been reluctant in taking on more full-time employees and have been relying more on temporary staff, further affecting unemployment rates.