The monthly seasonally adjusted rate fell to 180,291 units last month, down from 193,021 in July and 193,797 in June.
August's seasonally adjusted rate is the lowest since April, when there were 175,922 units.
The six-month average also dipped to 187,197 units in August from 187,324 in July.
Housing starts in urban areas fell by 5.8 per cent from July's level, mostly because of fewer multiple-unit projects such as condos or apartments, the Ottawa-based federal Crown corporation reported Tuesday.
"The trend in total housing starts continued to be relatively stable for a sixth consecutive month, remaining within a narrow range of roughly 182,000 to 188,000 units since March 2013," said said Mathieu Laberge, CMHC's deputy chief economist, in a statement.
"This is in line with our forecasts."
However, the decline was bigger than others expected. Estimates compiled by Thomson Reuters had forecast the August seasonally adjusted rate would be 189,500 units.
BMO economist Benjamin Reitzes said Ontario was one of the few bright spots, with starts up 14 per cent. That was offset by declines in the other regions, with the Prairies down 21 per cent, B.C. down 18 per cent, Quebec down nine per cent and Atlantic Canada down seven per cent.
Alberta accounted for the bulk of the drop in the Prairies, leading Reitzes to suggest efforts to clean up from devastating floods in late July may have diverted resources away from new home construction.
"Canada's housing market remains in good shape despite the larger-than-expected decline in August housing starts," Reitzes said in a commentary.
"Indeed, through the first eight months of 2013 starts are averaging 183.2k, essentially right on demographic demand. Building permits have also remained healthy in recent months, hinting at some near-term upside for starts."
Reitzes said that higher mortgage rates will restrain housing sector activity in the second half of 2013, but it seems the industry is headed for a "soft landing" — rather than a major downturn that some observers had predicted.
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