Home construction in the United States unexpectedly rose during April, but building permits took their sharpest fall in 17 years.

Meanwhile, U.S. industrial production rose more than expected during April as motor vehicle and utilities output grew at a fair clip for the month.

Housing starts increased 2.5% to a seasonally adjusted 1.528 million annual rate, after rising by 0.3% in March, the U.S. Commerce Department said Wednesday. Originally, March starts were seen increasing by 0.8% to 1.518 million.

The 2.5% increase in April construction surprised analysts. Economists had expected a 2.2% drop to a 1.485 million annual rate. Despite the unexpected increase, housing starts, year over year, were 16% lower than the level in April 2006.

U.S. building permits last month fell, down by 8.9% to a 1.429 million annual rate, the U.S. Commerce Department report said. It marked the biggest decline since 24% in February 1990. Economists had expected a 2.4% decline to 1.526 million.

U.S. industrial production rose 0.7%, the Federal Reserve said today. Output decreased 0.3% in March, revised down from a previously estimated 0.2% decrease.

Capacity utilization rose to 81.6%. March capacity use was 81.2%, revised down from 81.4%. The 1972-2005 average remained 81.0%.