Building materials suppliers off on housing report

Fresh evidence Wednesday that the nation remains gripped by a severe housing downturn hammered shares of building materials suppliers.

The Commerce Department said housing construction dropped a surprise 6.2 percent last month to a seasonally adjusted annual rate of 895,000 units. That's the slowest building pace since January 1991, another period when housing was going through a painful correction.

The decline, larger than the 1.6 percent drop analysts expected, reflected a 1.9 percent decline in single-family construction and a 15.1 decline in multifamily construction.

Building activity fell 14.5 percent in the Northeast, 13.6 percent in the Midwest and 7.4 percent in the South. Only the West showed growth, up 10.8 percent.

All the declines left construction activity 33.1 percent below the level of a year ago. Analysts believe that construction will continue falling for many more months as builders struggle to reduce the backlog of unsold new homes in a market that continues to slump.

Building permits, considered a good indicator of future activity, dropped 8.9 percent in August to an annual rate of 854,000 units.

Masco Corp. fell 98 cents, or 5.2 percent, to $17.88, Owens Corning declined $1.70, or 7 percent, to $22.71 and Louisiana-Pacific Corp. decreased $1.13, or 11 percent, to $9.16.