The rate of home construction plunged in October in the United States, the Commerce Department reported Wednesday.

Construction of U.S. homes plunged in October. (Gerry Broome/Associated Press)

Starts were off 10.6 per cent.

That is the lowest point since April and is a sign builders doubt buyers will soak up the glut of homes already on the market. Builders were also uncertain whether Congress would extend a tax credit for homebuyers.

Earlier this month, lawmakers renewed the credit and extended it to more buyers.

"It will take a while before residential construction begins to contribute meaningfully to growth," Jennifer Lee, an economist at BMO Capital Markets, wrote in a research note.

The slow recovery is also holding back inflation.

The Labour Department said consumer prices rose 0.3 per cent in October. Core inflation, which excludes more volatile prices for energy and food, rose 0.2 per cent.

Ian Pollick, an economics strategist with TD Securities, said in a commentary that the report shows deflation pressures are easing.

"We are very much inclined to believe that this will be the last month where headline prices are negative on an annual basis," he said.

(With files from The Associated Press)