Housing starts in America fell to a 14-year low in October, signaling the real-estate slump will weigh on growth, economists said before a report this week.

Construction fell 1.8% to an annual rate of 1.17 million homes, according to the median forecast of economists surveyed by Bloomberg News before a Commerce Department report on November 20. Building permits, an indicator of future activity, fell 2.1% to a 1.2 million pace, economists forecast.

Sales are dropping and inventories are growing as the collapse in subprime lending and the prospect of further declines in property values scare away buyers. Tumbling residential construction will weaken the economy into 2008. “The housing recession looks far from over,” an economist at Lehman Brothers Holdings Inc. in New York, Michelle Meyer, said. “Builders continue to cut construction aggressively.”

A November 19 report will reinforce the view that prospects for the housing market are worsening. The National Association of Home Builders/Wells Fargo index of builder confidence probably fell to a record-low 17 this month from 18 in October, according to the survey median.

Sales of previously owned homes fell in September to the lowest level since record-keeping began in 1999, while new-home sales rose from an 11-year low, according to reports last month. Housing starts in September were down 48% from their peak in January 2006.

Toll Brothers Inc., the largest American luxury homebuilder, said November 8 that fourth-quarter revenue fell 36% and the rate at which contracts were canceled rose to the highest ever.

“We do think that this is worse than it was in ’88 through ’90,” the chairman of Toll Brothers, Robert Toll, said on a conference call. “We can’t predict how long this down-period will last.”

A report November 21 from the Conference Board is likely to show the housing recession is spilling over to the broader economy.

The New York-based private research group’s index of leading economic indicators declined 0.3% for October, according to the survey median, after increasing 0.3% the prior month.

The index, which points to the direction of the economy over the next three to six months, includes housing permits as one of its components. An increase in the number of people filing first-time claims for jobless benefits and fewer orders for consumer goods and for capital equipment also contributed to the projected decline, economists said.

A measure of consumer expectations for the economy over the next six months is another of the 10 indexes that form the leading gauge.

Sentiment is weakening as home values fall and gasoline prices climb, raising risks of a slowdown in the spending that accounts for two-thirds of the economy.

The Reuters/University of Michigan final consumer sentiment index, due November 21, fell to 75 in November from 80.9 the previous month, according to the survey median. That is the lowest reading in two years and matches a preliminary result published November 9.

The growth outlook for the rest of 2007 and 2008 has deteriorated since August, when concern over defaults on subprime mortgages squeezed access to credit, prompting further drops in home sales.

Economists surveyed by Bloomberg in early November forecast the economy would grow at an annual rate of 1.5% in the fourth quarter after expanding at a 3.9% pace in the previous three months. They forecast 2% growth in the first quarter of 2008.