The number of building permits and housing starts in the U.S. dropped sharply in August, falling short of economists' already tempered expectations.

U.S. Housing starts fell 14.4 percent in August from July, to a seasonally adjusted annual pace of 956,000 units, according to a Reuters report based on the monthly data from the U.S. Department of Commerce.

Economists had previously predicted a drop off in housing starts in August, but expected the annual rate to drop to just 1.04 million units. The August numbers likely will be revised when next month's report is released.

Groundbreaking on single-family homes, which is the largest part of the housing market, fell 2.4 percent in August to a seasonally adjusted annual pace of 643,000 units. In July, single-family home starts jumped 11.1 percent.

Groundbreaking in the multifamily sector dropped 31.7 percent in August to an annual rate of 313,000 units, Market Watch reported.

Building permits issued in the U.S. also fell in August, down 5.6 percent to an annual rate of 998,000 permits. Economists had expected permits to fall to a 1.05-million unit annual rate. July's numbers were revised to an annual rate of 1.06 million permits.

Single-family permits issued in August fell 0.8 percent to an annual rate of 626,000. However, permits in the South -- which accounts for more than half of U.S. single-family construction -- hit the highest monthly level since April 2008.

Multifamily permits fell in August, down 12.7 percent to an annual rate of 372,000.

Analysts say the degree of the drop in August housing starts and building permits was unexpected, but that they expect the housing market to continue its creeping recovery. The market still is affected by high unemployment rates and strict loan practices by banks.

Despite the lower-than-expected housing starts and building permits, a survey this week showed homebuilder sentiment has reached the highest level in nine years and those builders said they've been a steep increase in buyers over the last couple of months.