WASHINGTON – New housing starts fell sharply last month in the Northeast, although new permits for future construction rose compared with August, according to the joint report issued today by the U.S. Commerce Department’s Bureau of the Census and the U.S. Department of Housing and Urban Development (HUD). Nationwide, housing starts fell in September to a 26-year low, while construction authorizations also continued to decline.

U.S. builders broke ground on new dwellings last month at a seasonally adjusted rate of 817,000 units per year, the Census Bureau said. That represented a decrease of 6.3 percent from August’s downwardly revised rate of 872,000 per year and a 31.1-percent decline from September 2007’s revised 1.185 million units per year.

Analysts had expected total housing starts would dip to an annual pace of 872,000 – from the original August estimate of 895,000 per year – based on the median forecast from a Bloomberg News survey of 74 economists. (Their estimates of the September pace ranged from 840,000 to 935,000 units per year.)

Single-family housing starts also continued to decline nationwide; their September pace of 544,000 units per year was 12 percent below their revised August rate of 872,000 and 41.9 percent below the year-ago level of 936,000 houses per year. But multi-family housing starts climbed last month after falling the month before. New construction of structures with five or more units rose to 254,000 units per year, an increase of 5.8 percent from August and 15.5 percent from September 2007.

Housing permits – an indicator of future construction – were issued nationwide last month at a seasonally adjusted rate of 786,000 units per year, down 8.3 percent from the previous month’s revised rate of 857,000 per year and 38.4 percent from the revised September 2007 estimate of 1.277 million.

Single-family authorizations nationwide fell to 532,000 units per year, a decline of 3.2 percent from August and 38.9 percent from the year-ago 870,000 authorizations per year. Multi-family permits also were issued at a slower rate in September, with authorizations for buildings of five or more units falling to 225,000 units per year, down 6.5 percent from August and 37.0 percent from September 2007.

In the Northeast, new residential construction plunged last month to an annual pace of 117,000 units per year, a decline of 20.9 percent from August and 18.2 percent from September 2007. Single-family housing was started at a rate of 59,000 units per year, a decline of 4.8 percent from August and 23.4 percent from a year ago.

Total housing starts fell compared with August in the West (-16.8 percent) but rose in the South (+0.5 percent) and the Midwest (+5.6 percent). New housing construction lagged year-ago levels in every region.

New permits rose in the Northeast, however. Across the region, housing permits were issued last month at a 93,000-unit-per-year pace, an increase of 13.4 percent compared with August but a decline 32.6 percent from their September 2007 level. Single-family permits in the Northeast fell 8.5 percent compared with August and 31.6 percent compared with a year ago, to 54,000 units per year.

Total housing authorizations fell in every other region, the Census Bureau said. The sharpest monthly decline was in the West (-12.7 percent), while the South (-9.9 percent) and Midwest (-9.8 percent) were neck-and-neck. Compared with September 2007, the permits for residential construction fell sharply in every region.

The federal takeover of government-sponsored enterprises Freddie Mac and Fannie Mae, the recent bank failures and the continuing credit crisis “are putting a new nail” in the housing market’s coffin, David Seiders, chief economist at the National Association of Homebuilders (NAHB), told Bloomberg Television, adding: “This sort of vicious feedback loop is still in play.”

“The full impact from the financial meltdown is yet to come,” agreed David Sloan, a senior economist at 4Cast Inc. in New York, in an interview with Bloomberg News. “Housing will be a drag on growth into the middle of next year. The bottom is now looking further away than it did previously.”

Additional information, including the full New Residential Construction Report issued today by the U.S. Commerce Department’s Census Bureau and the U.S. Department of Housing and Urban Development (HUD), is available at www.census.gov.