Economists forecast that housing starts rose by 10.4% at a seasonally adjusted annual rate of 1.156 million, according to Bloomberg.
Indeed, both single-family (up from 785,000 to 869,000) and multifamily (up from 269,000 to 454,000) made healthy gains in October, with single-family construction starts reaching a nine-year high.
Housing experts will be paying attention to the single-family segment of the market, where construction has not kept up with demand for homes.
"Housing starts jumped in October - climbing to the strongest pace since 2007 - as multifamily units bounced back sharply from an unusual (and temporary) decline during September", Nationwide Chief Economist David Berson said. This is 0.3% above the revised September rate of 1,225,000 and is 4.6% above the October 2015 estimate of 1,175,000.
"To put October's numbers into context, housing starts per household are about where they were in March 1993", McLaughlin said.
Residential starts surged 25.5 per cent to a 1.32 million annualised rate, the fastest since August 2007 and exceeding the highest projection in a Bloomberg survey, a Commerce Department report showed Thursday.
Groundbreaking on houses in the U.S. increased more than expected in October, according to the Census Bureau's monthly report.
The Commerce Department said there was 90 per cent confidence that the change in sales last month ranged from an increase of 12.9 per cent to a 38.1 per cent surge, underscoring the volatility of the data. He also said he expects the overall number to fall a bit through the winter before increasing again next year.
Monthly housing figures are often choppy and can be subject to large revisions. The construction gauges have rebounded since 2011, but the pace of gains slowed over the past year.
The modest increase came as a surprise to economists, who had expected building permits to drop by 2.9 percent to a rate of 1.190 million.
"The jump in starts was concentrated in the hyper-volatile multi-family sector, up 69%, but single-family starts jumped too, up 10.7% after an 8.4% increase in September (all the September drop was multi-family)".
Robert Denk, vice president for forecasting and analysis at the National Association of Home Builders, agrees, with some recent-historical perspective.