Builders broke ground on more U.S. homes in March than anticipated and took out permits at the fastest pace in more than a year, a sign the weakest part of the economy has stabilized.

Housing starts climbed to an annual rate of 626,000 last month, up 1.6 per cent from February’s 616,000 pace, Commerce Department figures showed. Building permits, a sign of future construction, climbed to the highest level since October 2008.

“We are unambiguously seeing an improving trend in housing,” said Richard DeKaser, president of Washington’s Woodley Park Research.

“We have got a rebound in residential activity which counters the collapse over the last three years.”

An improvement in the housing market signals a broadening of the economic recovery. A separate report showed consumer confidence unexpectedly slumped in April, indicating Americans are worried the expansion will be too slow to bolster the labour market.