October 20 2010 (Jeff Alan)

Amidst a background of what seems like a continuous barrage of bad news, finally some good news! Housing starts rose to a 610,000 annual rate in September, the most since April, and a 0.3 percent increase from a revised 608,000 rate in August, according to figures released Tuesday by the Commerce Department.

At the same time, building permits, a predictor of future activity, fell 5.6 percent to a 539,000 annual rate, the lowest level in more than a year. The decline was mostly driven by multi-family construction, an often volatile space.

“At least we’re making some progress here,” says John Herrmann, senior fixed-income strategist at State Street Global Markets in Boston. “It’s a slow, steady-as-she-goes improvement in builder activity.”

Single-family starts were up 4.8 percent in the South, but they were down 2.9 percent in the Northeast, 8.2 percent in the Midwest, and 3.6 percent in the West.