NEW YORK (CNNMoney.com) -- New home construction surged to a five-month high in September, but permits for future building fell to their lowest level in more than a year, the government said Tuesday.
Housing starts, or the number of new homes being built, rose 0.3% to a seasonally adjusted annual rate of 610,000 in September, up from a revised 608,000 in August, the Commerce Department said.
Economists were expecting a rate of 579,000 housing starts, according to a consensus estimate from Briefing.com.
It was the largest number of new homes being built in five months, and marked a 4.1% increase over last September.
"This is an encouraging sign that builders are continuing to build at a very slow pace, but nevertheless the increases are slow as they wait for consumers to get more confident," said David Crowe, chief economist with the National Association of Home Builders.
Insecurity about the economy and jobs is the main fear holding consumers back from big purchases like homes, Crowe said.
A back-up of foreclosed homes on the market is also limiting new construction, said Kevin Brungardt, chief executive of RoundPoint Financial Group, and a former vice president of Fannie Mae.
"A large inventory of foreclosed properties, high unemployment, slow sector growth and continued house price uncertainty continue to limit housing demand," he said.
New homes by sector: New construction of single-family homes, the key sector of the housing market, rose 4.4% over the month to an annual rate of 452,000, a four-month high.
But the annual rate for new construction of multi-family homes -- buildings with 5 or more units -- fell 6.8% to 150,000.
Building plans: Permits for future construction rose to a seasonally adjusted annual rate of 539,000 last month, down 5.6% from August. Economists were expecting 565,000 permits in September.
The last time building permits fell below 550,000 was in May 2009.
Nike is opening up shop on Amazon.com and the company plans "big shifts" over the coming year. More
The latest Obamacare repeal effort would give states more control over federal health care dollars, but it would also mean less funding for nearly all. More
Roshni Rides wants to help refugee communities become self-sufficient through its rickshaw ride-sharing service. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
Two-thirds of Americans are concerned about the Equifax breach -- but far fewer have taken steps to protect themselves. More