Housing starts fell to a three month low of 1.126 million in August, missing expectations of 1.116 million, and below last month's downward revised 1.161 million, the Census Bureau and the Department of Housing and Urban Development said.

The decline was driven by starts in the Northeast tumbling by 34% to 108,000, the lowest prince since March now that a tax-incentive that boosted the region has ended.

This comes even as homebuilder confidence hit a 10-year high for September.

Single-family starts dropped, as did multifamily starts. Housing starts are hovering right at half of the pre-crisis norm, even as rental rates continue to set new highs.

“August housing starts disappointed, but this is a mere blip on the radar,” said Tom Wind, executive vice-president of Home Lending at EverBank. “The housing market’s underlying fundamentals remain on pace for continued recovery.” 

Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,170,000. This is 3.5% (±1.4%) above the revised July rate of 1,130,000 and is 12.5% (±1.9%) above the August 2014 estimate of 1,040,000.

“The small dip in August housing starts is minor considering the sustained momentum we’ve seen in housing overall in 2015,” said Quicken Loans Vice President Bill Banfield. “When you couple the slow but steady rise in single-family unit construction with an increase in builder confidence, it’s further support that housing is returning to its place as a major player in driving economic growth.”

Single-family authorizations in August were at a rate of 699,000; this is 2.8% (±1.7%) above the revised July figure of 680,000. Authorizations of units in buildings with five units or more were at a rate of 440,000 in August.

Privately-owned housing starts in August were at a seasonally adjusted annual rate of 1,126,000. This is 3% (±11.3%)* below the revised July estimate of 1,161,000, but is 16.6% (±10.4%) above the August 2014 rate of 966,000.

Single-family housing starts in August were at a rate of 739,000; this is 3% (±9.5%) below the revised July figure of 762,000. The August rate for units in buildings with five units or more was 381,000.

Privately-owned housing completions in August were at a seasonally adjusted annual rate of 935,000. This is 6.1% (±12.5%) below the revised July estimate of 996,000, but is 3.3% (±12.7%) above the August 2014 rate of 905,000.

Single-family housing completions in August were at a rate of 646,000; this is 1.6% (±11%) above the revised July rate of 636,000. The August rate for units in buildings with five units or more was 283,000.