US home construction saw a surprise decline in July, with both new starts and building permits suffering a drop after rising for two months, the Commerce Department said Tuesday.

Privately-owned housing starts fell at a seasonally adjusted annual rate of 1.0 percent to 581,000 from the revised June estimate of 587,000, the department said.

Most analysts had expected 599,000 new starts in July.

Building permits to construct privately-owned homes fell to a seasonally adjusted annual rate of 560,000, 1.8 percent below the revised June rate of 570,000 and below the forecast by analysts of 577,000.

The unexpected drop in housing starts and building permits came after rises chalked up in May and June from all-time lows reached in April following the collapse of the housing bubble. The ensuing home mortgage meltdown triggered the global financial crisis that plunged the world's largest economy into recession in December 2007.

Housing starts in July were 37.7 percent below the 933,000 level in the same month in 2008 while building permits were 39.4 percent lower than 924,000 level in the same period.

The number of permits to build single-family homes, the largest segment of the housing construction sector, rose for the fourth month running, by 5.8 percent to 458,000 from the revised June figure of 433,000.

Permits for buildings with five units or more plunged 26.3 percent to 84,000 in July.

Single-family housing starts reached 490,000 in July -- 1.7 percent above the revised June figure of 482,000 while starts on buildings with five units or more dropped 16.7 percent to 80,000.