Building permits (charts) were issued in August at a 3.2 percent higher rate than in July, but housing starts (chart) fell even further than expected according to data released Tuesday by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

Starts of privately owned housing fell 5.0 percent below the July figure of 601,000 (revised from the original estimate of 603,000) to a seasonally adjusted annual rate of 571,000.  The Census Bureau said this was the largest drop since April.  According to Reuters, economists they polled had forecast that starts would fall, but only to a 590,000 unit rate. The August rate is 5.8 percent below the rate of 606,000 one year earlier and, according to Reuters, housing starts are now at less than one third of their peak during the housing boom.  The annual rate of single-family starts was down 1.4 percent from July to 417,000.  The annual rate for buildings with five or more units was 148,000.

Data on permits was more encouraging for prospects of future construction activity.  Permits were issued at a seasonally adjusted annual rate of 620,000 units during the month compared to an upwardly revised number of 601,000 units in July.  The July number was originally pegged at 597,000 units.  The August figure was 7.8 percent above the estimate of 575,000 units in August 2010.  This was especially good news as economists had expected permits to fall to a 590,000 unit pace.  Single family authorizations constituted 413,000 of the permits, an increase of 2.5 percent from July.  Authorizations for buildings with five or more units were at the rate of 178,000.

Housing completions (chart) were at a seasonally adjusted annual rate of 623,000, 2.7 percent below the revised July number of 640,000 and up from the rate of 607,000 one year earlier.

On a regional basis, single family starts were down in every region but the South but multiple family starts kept overall numbers slightly positive in both the West and Midwest.  The Northeast stood out with its numbers.  Overall starts were down 29.1 percent from July and single family starts were off 14.6 percent.

Permitting rose in every region but the South where a drop in multi-family permits pulled the numbers into slightly negative territory.  Single family permits fell 10.8 percent since July in the Northeast.

At the end of August there were 85,300 permits nationwide that had been issued but where construction had not started, an increase of 6.4 percent since July.  Multiple family permits represent 37,900 of the backlog and single family permits outstanding number 45,100