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Single-family housing starts to gain in September from the previous month amid lower mortgage rates.

Measurements rose 2.7% to a seasonally adjusted annual pace of 1.027 million units, the strongest pace in five months, according to new data from the Census Bureau.

The increase comes as mortgage rates fell steadily last month, pushing the average 30-year fixed loan to its lowest level since early February 2023. The Fed cut its benchmark rate by half a percentage point in September

The lower rate likely encouraged builders to file more building permits in the month. Contract permits for single-family dwellings rose at a pace of 970,000, a 0.3% increase from August's revised figure of 967,000 units.

October data may reveal a different story, given that mortgage rates have backed up.

“While single-family home construction rose in September, higher mortgage interest rates in October will put a damper on growth in next month's data,” NAHB chief economist Robert Dietz wrote in a note after the release.

Overall, housing eased in September, pressured by a decline in multi-family construction. Housing starts slipped 0.5% from the previous month to a seasonally adjusted annual pace of 1.354 million units.