Housing starts came off last month’s positive news, posting a considerable slowdown in home building.  

Privately-owned housing starts in August were at a seasonally adjusted annual rate of 1,142,000, according to a report released by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. This is 5.8% below the revised July estimate of 1,212,000, but is 0.9% above the August 2015 rate of 1,132,000.

Of those, single-family housing starts in August came in at a rate of 722,000, which is 6% below the revised July figure of 768,000.

Trulia Chief Economist Ralph McLaughlin explained in his write-up of the report that although new housing starts slowed in August, the 12-month rolling total of starts, which is a less volatile measure of new construction activity, grew 7.5% year-over-year in August to 1,157,300 starts.

McLaughlin noted that’s August marks the fifth straight month where gains fell from the previous month.

This chart from Trulia shows the 12-month rolling total of housing starts.

Meanwhile, Capital Economics stated, “As expected, housing starts fell back in August. But more of a worry is that building permits fell for the second consecutive month, indicating that builders have yet to respond to tight market conditions. But with homebuilder confidence at a 10-year high, that should soon change.”

Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,139,000. This is 0.4% below the revised July rate of 1,144,000 and is 2.3% below the August 2015 estimate of 1,166,000.

Single-family authorizations in August were at a rate of 737,000, which is 3.7% above the revised July figure of 711,000.

“It is something of a surprise that builders are not beginning to ramp up production,” Capital Economics stated in it reports.

For example, it noted that jobs are being created at a decent pace at the same time as mortgage rates are close to record lows.

“And with so many young adults living with their parents, builders should be able to count on steady demand for their homes,” the report stated.

As a result, Capital Economics stated that it still thinks housing starts will resume their upward trend before the end of the year, concluding “2017 should prove a much better year for homebuilding than 2016.”