U.S. housing starts slipped a bit in August, but they remain at very high levels.

Home-building dropped off in August, down from a 17-year high in July as the sector has begun to show signs of cooling, the U.S. Commerce department reported.

U.S. housing starts dropped 3.8% following an increase of 2.6% in July, the highest since April 1986. But building permits, a reflection of future building activity, rose 4.8%.

“After reaching their highest level since 1986 in July, housing starts took a bit of a breather in August,” says BMO Nesbitt Burns. Starts of single-family units fell 4%, and multi-family starts dropped 3.1%.

“Despite the monthly decline, starts are still well above the already-robust average of the past 12 months and should continue to be good news for home-related retailers,” it says. “Armed with tax cuts, homeowners will continue to fill their new homes with furniture and electronics.”

“Despite the decline in today’s numbers, total housing starts remain remarkably strong – on a year-over-year basis, starts have climbed by 11.7% since last August,” RBC Financial says.

“Despite the August decline, housing starts remain at very robust levels and the sector should continue to provide support to the economy,” Nesbitt concludes. “However, housing will not be as much of an economic powerhouse going forward as the sector will have to weather the rise in mortgage rates since mid-year.”

In a separate release, the ABC News/Money Magazine consumer comfort index, a measure of U.S. consumer’s assessment of current conditions, fell three points to -19; this marks the lowest reading in eight weeks and follows a 2-point improvement seen last week.

“Overall, confidence appears to have remained relatively flat since the beginning of June, and it will likely remain flat until an appreciable improvement in employment conditions is seen,” RBC finds.