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

The index 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 came as mortgage interest rates fell steadily last month, pushing average 30-year fixed loans to their lowest level since early February 2023. The Federal Reserve cut its benchmark interest rate by half a percentage point in September.

It is likely that lower prices encouraged construction companies to submit more building permits during the month. Contract permits for single-family residences rose to a pace of 970,000, an increase of 0.3% from August’s revised figure of 967,000 units.

October’s data could tell a different story, given that mortgage rates are back on the rise.

“While single-family homebuilding increased in September, higher mortgage interest rates in October will likely dampen growth in next month’s data,” Robert Dietz, NAHB’s chief economist, wrote in a note after the release.

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