Home builders continue to reduce the number of houses they break ground on. This morning, the Commerce Department, through the Census Bureau, released its estimates for housing starts for August, which fell to a seasonally adjusted annualized rate of 895,000 units. That figure was 33.1% below the starts for the same month a year ago and 6.2% below the July 2008 estimate.

Builders achieved an estimated annualized rate of 630,000 single-family home starts in August, which was 34.9% below the annualized single-family home starts figure for August 2007. Starts of two- to four-unit residences were statistically insignificant, but starts of buildings with five units or more were off 24.4% to an annualized rate of 251,000 units.

The total and single-family start figures in August were the lowest annualized rates for any month in 17 years. The numbers were even lower than what economists polled by Bloomberg News or MarketWatch had expected. Nevertheless, Nigel Gault, chief U.S. economist for Global Insight, contends that starts need to recede more "to work off that excess inventory."

Builders in many markets insist that, in fact, they have been paring their inventories, and the Census Bureau reported that the number of homes in various stages of construction nationwide had fallen by 15.8%, to 947,000 units, in August from a year ago. Housing completions in August, at an annualized rate of 961,000 units, were 9.8% below the rate in July of this year and 35.8% under the August 2007 estimate. Year-to-year single-family completions were down 44.8% to 676,000 units. Future completions should be even lower, based on Census data that show building permits in August down 36.4% from a year ago to an annualized rate of 854,000. Single-family permits fell 40.3% to 554,000.

On a regional basis, the Northeast had the steepest dip in housing start activity. There, starts were off by 56.1% when compared to August 2007 to an annualized rate of 153,000 units, which was also 13.4% below the July 2008 number. (Interestingly, single-family starts in the Northeast were off only 14.7% to 64,000.) In the Midwest, total starts in August were down 44.6% from a year ago to 133,000; in the South, by 42.1% to 403,000 units; and in the West, by 32% to 206,000.

Now, builders and other industry watchers must wait anxiously to see whether the ongoing decline in permits, housing starts, and completions has any meaningful impact on stabilizing housing prices, which Treasury Secretary Henry Paulson and several economists now insist is critical to stemming the failures of banks, investment houses, and insurers that have been reeling financially from their exposures to mortgage-backed securities and bonds whose value has deteriorated as home prices have sunk.

John Caulfield is a senior editor at BUILDER magazine.