The Commerce Department reported on Sept. 19 that construction of new homes and apartments fell by 6 percent, the third consecutive decline and a much bigger setback than analysts had been forecasting.

“Housing has just fallen off a precipice,” said Mark Zandi, chief economist at Moody’s Economy.com, who said he believed the central bank would discuss this slowdown in the statement it releases after Wednesday’s meeting.

David Seiders, chief economist at the National Association of Home Builders, said the organization’s survey of builder sentiment declined in September for the eighth consecutive month and now stands at its lowest point in more than 16 years.

“We have been warning that the housing downswing seems to be deeper than the Fed has been expecting and that the downside risks to housing are substantial,” Seiders said.

He said the biggest worry is if investors, who flooded into the market in the past two years to take advantage of double-digit home price gains, now start dumping houses back onto an already glutted market.

Seiders said he was forecasting that construction activity would fall by about 11 percent this year to around 1.85 million units, but given the steep August decline, he said that forecast may prove to be too optimistic.

Construction of single-family homes fell by 5.9 percent in August as builders struggled to get control of soaring levels of unsold homes. Construction of multifamily units fell by 6.7 percent.

In a sign of future activity, builders’ applications for permits for new construction fell 2.3 percent, the seventh straight monthly decline in permits.

Only the Northeast saw a gain in construction activity, a rise of 5.4 percent. Construction of new homes and apartments fell by 12.2 percent in the Midwest, 6.1 percent in the South and 5.5 percent in the West.

The 0.1 percent rise in the Producer Price Index, which measures inflation pressures before they reach the consumer, was helped by a sharp slowdown in energy prices, which rose by 0.3 percent after having jumped 1.3 percent in July.

Gasoline prices fell by 2.2 percent in August, the biggest drop in seven months, and analysts are looking for further good news on pump prices in September.