Housing starts slipped 1.3% last month to 2.009M units versus a downwardly revised 2.035M units in July.The drop outpaced Consensus expectations for a decline to 2.025M starts.

Single-family starts inched 0.1% higher in this last report taken before Hurricane Katrina hit the US Gulf Coast. The rise was due to higher single family starts in the Northeast (1.5% y/y) and in the West (6.1% y/y). Single family starts in the South fell m/m (+1.4% y/y) and in the Midwest (-6.5% y/y).

Yesterday's report from the Nat'l Association of Home Builders (NAHB) indicated slippage in their composite September index (-3.0% y/y) due to weaker current sales, weaker sales prospects and sharply lower buyer traffic. During the last twenty years there has been a 76% correlation between the y/y change in the NAHB index and the change in single family housing starts.

Multi family starts fell a sharp 8.5% m/m while building permits fell as well.

Assessing High House Prices: Bubbles, Fundamentals, and Misconceptions from the Federal Reserve Bank of New York can be found here.