WASHINGTON (Reuters) - U.S. housing starts fell modestly in February but stayed at relatively strong levels, the government said on Friday in a report that suggested the home building industry remains confident about the prospects for the months ahead.

The Commerce Department said groundbreaking for new single-family homes, town homes and apartments fell 0.4 percent to a seasonally-adjusted annual rate of 1.647 million units after posting a 4.8 percent gain in January.

While starts remained at a strong level, they stood 9.6 percent below the level seen in February of last year.

Starts gained 21 percent in the Northeast and rose 1.5 percent in the South, the region with the most homebuilding activity. Starts fell 8.1 percent in the West and contracted 2.7 percent in the Midwest.

Data for both January and February were likely boosted by an unusually mild winter, which allowed builders to work more days than would be normal at this time of year.