A government measure of new home construction, which fell in August to its slowest pace in more than 12 years, is forecast to show further declines. The Commerce Department report, due at 8:30 a.m. EDT Wednesday, is expected to show that construction of new homes and apartments in September fell to an annual rate of 1.288 million units, down 3.2 percent from a rate of 1.331 million units in August, according to the consensus estimate of Wall Street economists surveyed by Thomson/IFR. If September's results meet the forecast, they would be more than 25 percent below year-ago levels. August's construction results were the slowest pace since June 1995 and 19.1 percent below last year. Meanwhile, applications for building permits -- also included in the Commerce Department report and considered a good sign of future activity -- are forecast to show an annual rate of 1.3 million units, down 0.5 percent from 1.307 million units in August. The drop in new home construction comes amid slumping demand, as home prices have fallen and foreclosures have soared. The National Association of Home Builders said Tuesday that its survey of builder sentiment fell to the lowest-ever reading since the index began in 1985. Tighter lending standards, rising defaults among borrowers with weak credit and falling home prices have meant fewer buyers for struggling homebuilders such as D.R. Horton Inc., Pulte Homes Inc., Lennar Corp., Centex Corp. and Toll Brothers Inc. If that forecast is accurate, it would be the worst year since 1997, when 804,000 newly constructed homes were sold. Next year, 752,000 new home sales are expected, a drop of 6.6 percent from this year's forecast, according to the Realtors group. Federal Reserve Chairman Ben Bernanke warned Monday that the deepening housing slump "is likely to be a significant drag on growth in the current quarter and through early next year."