Housing starts fell to a seasonally adjusted annual rate of 571,000, off from the revised July estimate of 601,000.
The rate of housing starts is 5.8 percent below August 2010, when 606,000 housing starts were posted.
Permits issued for privately owned housing units rose 3.2 percent above the revised July rate of 601,000.
Permits issued are an indicator of what direction construction starts might take one or two months down the road.
The 620,000 permits issued in August were 7.8 percent above August 2010.
Completed housing projects in August were estimated at a seasonally adjusted annual rate of 623,000, 2.7 percent below July's revised rate of 640,000 and 2.6 percent above the August 2010 rate of 607,000.