Wall Street economists had expected a reading of 27, according to the consensus forecast of economists surveyed by Thomson/IFR.
The index is based on a survey of residential developers nationwide. It was the fifth straight monthly decline.
Index ratings higher than 50 indicate positive sentiment about the market. The seasonally adjusted index has been below 50 since May 2006.
"The single-family housing market is still in a correction process following the historic and unsustainable highs of the 2003-2005 period," David Seiders, the group's chief economist, said in an e-mailed statement.
Seiders said he expects sales to rebound by year-end and new home construction to start recovering by early next year.
The index has fallen every month since March, as demand for new housing slumped amid rising interest rates and a spike in the number of defaults among borrowers with weak, or subprime, credit. Freddie Mac, the government-sponsored mortgage company, reported last week that 30-year fixed-rate mortgages averaged 6.73%, just below the highest point reached this year.
Higher mortgage rates and tighter lending standards lessen demand for big homebuilders such as D.R. Horton, Pulte Homes, Lennar, Centex and Toll Brothers.