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(Corrects paragraph 7 to say starts, not permits, had risen 23.1 percent in November)
* Housing starts fall 9.8 percent in December
* Permits slip 3 percent, all declines in single-family units
WASHINGTON, Jan 17 (Reuters) - U.S. housing starts fell less than expected in December, pausing after recent strong gains that had propelled home building activity to multi-year highs.
The Commerce Department said on Friday groundbreaking dropped 9.8 percent to a seasonally adjusted annual rate of 999,000-unit pace.
It was the largest percentage decline since April.
Economists polled by Reuters had expected starts to fall to a 990,000-unit rate in December. For all of 2013, starts increased 18.3 percent to an average of 923,400-units. Groundbreaking for single-family homes, the largest segment of the market, fell 7.0 percent to a 667,000-unit pace in December. Starts for the volatile multi-family homes segment declined 14.9 percent to a 332,000-unit rate.
Starts in the Midwest tumbled 33.5 percent, suggesting cold weather might have weighed on home building in the region last month.
While frigid weather probably dampened activity, some of the slowdown last month was also payback after November's eye-catching gains. Starts in November had increased 23.1 percent and crossed the 1-million unit mark. That was the highest level since early 2008.
Residential construction has been on the rise after a brief lull last year in the wake of a run-up in mortgage rates.
Increasing household formation and a tight supply of houses has been boosting home building, which in turn is supporting the labor market.
Permits to build homes fell 3.0 percent in December to a 986,000-unit pace. It was the second straight month of declines. They were weighed down by a 4.8 percent drop in permits for single-family homes. Multifamily sector permits were flat.
For all of 2013, permits increased 17.5 percent to an average of 974,700-units. (Reporting By Lucia Mutikani; Editing by Paul Simao)