Construction of new homes rose 6.3% in September and permit activity increased, suggesting that the gradual housing recovery is continuing, data released Thursday by the U.S. Commerce Department shows.

September groundbreakings rose to a seasonally adjusted, annual rate of 1.017 million, up from August’s revised 957,000. September’s rate was 17.8% higher than the pace of 863,000 one year earlier, and fell within the range expected by economists surveyed ahead of the release by Bloomberg Bloomberg.

Building permits also bumped up 1.5% in September, to an annual (seasonally adjusted) rate of 1.018 million, over August’s revised 1.003 million level. September’s permit numbers are 2.5% above one year earlier.

Despite the increase in September activity in both permitting and housing starts, builders confidence is down slightly, according to the National Association of Home Builders/Wells Fargo. Yesterday the group released its Housing Market Index, which shows that builder confidence in the market for new, single-family homes fell five points, to a level of 54, in October. Any number over 50 indicates that more builders view the market as favorable than as poor.

“After the HMI posted a nine-year high in September, it’s not surprising to see the number drop in October,” said NAHB’s chief economist David Crowe. “However, historically low mortgage interest rates, steady job gains, and significant pent up demand all point to continued growth of the housing market.”

September’s numbers show that builders are continuing to bet on multi-family housing. While permits issued for single-family homes were relatively flat at 624,000 (0.5% below August’s revised 627,000) in September, permitting rose by 7% for buildings with five or more units, to 369,000 in September from 345,000 in August. Similarly, groundbreakings on single-family homes stood at a rate of 646,000 in September, just 1.1% above August’s revised figure. Starts on buildings with five or more units were at 353,000, up 18.5% from August.

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http://www.forbes.com/sites/erincarlyle/2014/10/17/housing-starts-rise-17-8-year-over-year-in-september/