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Construction of new privately-owned residences dropped 6.0 percent last month compared to July, according to a joint report by the U.S. Census Bureau and the Department of Housing and Urban Development. The report also showed housing starts to be 19.8 percent below the August 2005 rate.

“Housing’s recent deceleration has held the spotlight in terms of gauging how well the economy is faring,” says Bob Walters, chief economist of Quicken Loans. “But if you stop to consider that long-term interest rates are still near historic lows and the Fed is all but certain to pause on short-term rate hikes this month, you’ll see that the economy remains highly conducive to housing. This is further bolstered by retail sales being up last month against predictions.”

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