NEW YORK (CNN/Money) - Construction on new homes in the United States slowed in August from July's red-hot pace, the government said Wednesday.

The Commerce Department said the pace of housing starts fell 3.8 percent to a seasonally adjusted annual rate of 1.82 million units, after rising a revised 2.6 percent to 1.89 million units in July. Economists, on average, expected housing starts to drop to a 1.83 million-unit pace, according to Briefing.com.

July's pace of housing starts was the fastest since a 1.9 million-unit annual rate in April 1986.

Building permits, a more leading indicator of demand for new homes, rose 4.8 percent in August to an annual rate of 1.89 million units from a revised 1.8 million in July. Economists expected permits to be flat, according to Briefing.com.

U.S. stock market futures had little reaction to the report, continuing to trade lower, pointing to a negative opening on Wall Street. Treasury bond prices rose.

The housing market has for several months been one of the few bright spots in an otherwise mediocre economy, as super-low interest rates have enabled homeowners to refinance their mortgages at lower rates, cutting their monthly payments and allowing them to tap into surging home equity.

Mortgage rates have risen from their mid-summer lows, but are still low by historical standards, encouraging many last-minute buyers to come into the market. Though demand for refinancing has stalled, demand for new-home loans is still strong.

The Northeast saw a 23.3-percent drop in the pace of sales, while the Midwest saw a 1-percent gain. Sales in the South fell 2.7 percent, while sales in the West fell 1.8 percent.