The official Government figures were released as a separate survey by the Federation of Master Builders showed the number of house builders building fewer than 500 homes a year has fallen to 3,824, it lowest level since record began.
FMB director Brian Berry warned the lack of house builders would hamper the recovery.
The latest seasonally adjusted Government figures show house building starts fell to 23,410 in the September quarter, 1% lower than the previous three months.
Starts now stand at half the level under construction when the sector peaked at the end of 2005.
The 12-month rolling annual figure is 7% down on last year at just 96,070 starts.
Actual completions are now running at the lowest level seen for several decades and will alarm Government, which has pledged to lead a housing revolution.
Following deep spending cuts the fall in social housing was expected, but more worryingly private homes starts are also falling.