Building permits, an indication of future activity, fell 6.6 percent in October to a 1.178 million unit pace. That was the lowest level since July 1993 and below the 1.2 million unit level economists were expecting.
For the 12-month period ended in October, housing starts were down 16.4 percent. Permits were down 24.5 percent.
"We have not hit a bottom (in housing). We need to see starts fall to a 1 million unit rate, or roughly a 20 percent drop from current levels, before building activities stabilize. And we need to see that rate for about one to two years," said Keith Hembre, chief economist at FAF Advisors in Minneapolis.
Adding to the dire housing outlook, D.R. Horton, the largest U.S. home builder, reported a quarterly loss after taking charges for the lower value of land and other housing-related inventory.
The charges were significantly below what some analysts had expected.
In addition, Freddie Mac, the nation's second-largest guarantor of home mortgages, announced that it set aside $1.2 billion in the third quarter to cover bad home loans and posted a $2 billion net loss, forcing it to search for ways to raise capital.