US stocks slumped on Tuesday after weak data from the housing sector overshadowed a round of stronger-than-expected corporate earnings, prompting traders to lock in recent gains.

The Dow Jones Industrial Average fell 50.71 points (0.84 percent) to 10 041.48 in final trades after scaling a new high for the year on Monday.

The Nasdaq composite shed 12.85 points (0.59 percent) to 2163.47 and the broad-market Standard & Poor's 500 index fell 6.85 points (0.62 percent) to a provisional close of 1091.06.

Government data released before trading showed continued weakness in the embattled housing sector even as companies reported better-than-expected corporate profits.

The Commerce Department said that construction starts on privately owned homes rose 0.5 percent to 590 000, lower than expectations of 610 000 by private economists.

Permits to build new homes, a leading indicator of the sector, fell 1.2 percent to 573 000, also lower than the expected 595 000 permits.

The fresh housing data raised "some concern the economic recovery may not be sustainable without government support," analysts at Charles Schwab said in a note to clients.

"With stock indices near 2009 highs, the Street is taking cue from economic reports and the implications for future growth in the economy, believing that some of the run-up in stocks has already anticipated the better earnings reports," they said.

Patrick Newport, economist at IHS Global Insight, said that although the market for single-family homes is improving, commercial real estate including apartments is hurting. He said multifamily starts are at their lowest since 1959.

"Property values are down, rental vacancy rates are at an all-time high and rising, too many units were put up during the good years, the securitization market imploded in 2008, banks are not lending, and the job market is still in recession," he said.