At first glance, the October housing numbers look bad, with the pace of total permits essentially flat at 550,000 and starts dropping 11.7% to 519,000 compared to the previous month.

But a closer inspection of the new construction figures released Wednesday by the U.S. Census Bureau indicate that typical multifamily volatility—not a plunge in the single-family market—is to blame.

“This report was not as bad as the headline number suggests,” explained Patrick Newport, U.S. economist for IHS Global Insight in Lexington, Mass. While multifamily starts of buildings of two or more units plunged 43.5% in October to a seasonally adjusted level of 83,000 units, single-family starts slipped just 1.1% to a 436,000-unit pace.

(Annually, multifamily starts are up 53.7% from October 2009 while single-family starts are down 8.2%.)

Meanwhile, single-family permits—“the key number in this report,” noted Newport—rose 1% in the first improvement in the past seven months, to a seasonally adjusted level of 406,000. (On an annual basis, that figure stands 13.2% below October 2009, when builders were still trying to take advantage of the current housing tax credit, which was then scheduled to expire in November.)

Multifamily permits slipped just 0.7% to a seasonally adjusted pace of 144,000 in October, which
represents a 33.3% gain compared to the same month one year ago.

Still, the overall level of activity remains lackluster in comparison to historical norms for new construction, according to analysts and industry watchers.

“Both total starts and permits activity are showing similar patterns to what field conditions indicate: After rising during Q1 2010, volume fell sharply with the federal home buyer tax credit's expiration and has since remained stable but pinned to weak levels,” observed Carl E. Reichardt Jr., a managing director and senior equity research analyst with Wells Fargo Securities in San Francisco. “We expect both starts and permits to remain soft unless job growth or consumer confidence begins to improve more markedly, although the mortgage lending and acquisition/development/construction finance environments are tight, and may need to loosen for construction activity to increase markedly.”

Alison Rice is senior editor, online, at BUILDER magazine.