Housing starts unexpectedly rose in September to a five-month high, but permits for future home construction nationwide fell on a sharp decline in approvals in the volatile multi-family segment, a government report showed today.

The Commerce Department said housing starts rose 0.3 percent to a seasonally adjusted annual rate of 610,000 units, the highest level since April. August starts were revised up to a 608,000-unit pace from the previously reported rate of 598,000 units.

Analysts polled by Reuters had expected housing starts to slip to a 580,000-unit rate. Compared to September last year, housing starts were up 4.1 percent.

New building permits dropped 5.6 percent to a 539,000-unit pace last month after an unrevised 2.1 percent increase in August. Permits were dragged down by a 20.2 percent tumble in multi-family units. Permits for single-family homes rose 0.5 percent last month.

Analysts had expected overall building permits to rise to a 580,000-unit pace in September.

Though the housing market is starting to settle down after hefty declines following the expiration of a government tax credit for home buyers, an overhang of unsold homes is stifling recovery.

A survey yesterday showed sentiment among home builders edged up this month, but remained at depressed levels.
Groundbreaking last month was lifted by a 4.4 percent increase in single-family home construction. Starts for the volatile multi-family segment fell 9.7 percent. (Reuters)