WASHINGTON, DC — New home construction in the United States fell 8% to an annual rate of 1.65 million units, according to the U.S. Commerce Department. Starts of new single-family homes dropped 11% in March, the largest monthly drop in seven years.

Economists expected a slowdown to an annual rate of 1.68 million units, yet spring sales remain relatively strong, despite a slight rise in mortgage interest rates.

Despite the monthly decline, construction of new homes in the first quarter was at a record-setting pace. After three months, starts in 2002 are up 5% over 2001's pace. In all of 2001, 1.6 million homes were started.