U.S. housing starts and permits rose in September, a signal the market's modest recovery is supporting what appears to be growing strength in the broader economy.
Groundbreaking rose 6.3 percent to an annual 1.02 million-unit pace, the Commerce Department said on Friday.
Economists polled by Reuters had forecast a slightly smaller gain.
Housing is clawing back after it imploded during the 2007-2009 financial crisis and recession. It suffered a setback last year when interest rates spiked, but rates have been falling lately.
The average 30-year mortgage rate dropped last week to its lowest level since June 2013, and the level of housing starts is not far from a seven-year high.
"If you look at the trend, you are still seeing an upward trajectory," said Michelle Meyers, an economist at Bank of America Merrill Lynch in New York.
U.S. stock futures jumped following a batch of solid corporate earnings reports and on hopes the Federal Reserve might slow the winding down of its stimulus in light of recent weakness in the global economy. Yields on U.S. government debt, however, extended gains after the release of the housing data.
New housing starts for single-family homes, the largest part of the market, rose 1.1 percent in September, while the more volatile multi-family homes segment jumped 16.7 percent.
Permits advanced 1.5 percent to a 1.02 million-unit pace last month.
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