Construction of new homes touched an 18-month low in October, falling much more than expected, according to a report by the U.S. Commerce Department.

Privately-owned housing starts fell 11.7 percent from the previous month to seasonally adjusted annual rate of 519,000 in October. They were down 1.9 percent from the same period last year.

Single-family housing starts were down 1.1 percent during the month.

Building permits, however, rose marginally during the month by 0.5 percent from September. However, it was down 4.5 percent from the same period last year.

On Tuesday, the National Association of Home Builders/Wells Fargo Housing Market Index stated that builder confidence was increasing in the market in November for the second month. Though the quantity of people looking to buy a house had not improved drastically, more people were serious about buying a house, the report said.

The U.S. housing market has been volatile since the the expiration of the home buyer tax credit in April. Unemployment rate continues to hover around 9.6 percent. The U.S. Federal Reserve pumped in more dollars in early November in an attempt to boost economic growth - a move that faced much criticism from countries around the world.

The drop back in housing starts to 519,000 demonstrates that the housing sector is not going to be the source of any pick up in economic growth, Paul Ashworth, an economist at Capital Economics, said.