U.S. housing starts in October fell to a seven-month low as single-family home construction in the South tumbled, but a surge in building permits suggested the housing market remained on solid ground.
Groundbreaking dropped 11 percent to a seasonally adjusted annual pace of 1.06 million units, the lowest level since March, the Commerce Department said on Wednesday. September's starts were revised down to a 1.19 million-unit pace from 1.21 million units.
Still, October marked the seventh straight month that starts remained above 1 million units, the longest stretch since 2007. That suggested a sustainable housing market recovery.
Rapidly rising household formation, mostly driven by young adults leaving their parental homes and a strengthening labor market, is supporting the housing sector.
Although residential construction accounts for just over 3 percent of gross domestic product, housing has a broader reach in the economy, with rising home prices boosting household wealth and, as a result, supporting consumer spending.