September proved a sluggish month for construction activity, with total housing starts rising just 0.3% to a seasonally adjusted pace of 610,000 and permits slipping 5.6% to a 539,000-unit level, compared to the previous month, according to data released Tuesday by the U.S. Census Bureau.

On an annual basis, total starts were up 4.1%; permits were down 10.9%, compared to last September.

But single-family posted slightly better monthly numbers, with permits inching up 0.5% to a seasonally adjusted pace of 405,000 while single-family starts rose 4.4%, to a 452,000-unit level. Such figures led analysts to suggest that the housing market may finally be finding its true level of demand, particularly when today’s figures are paired with yesterday’s builder confidence numbers.

“While the absolute level of all three metrics is still very weak in our opinion, the modest sequential rebound in these data suggests to us that a post tax-credit stabilization may be underway,” said Carl E. Reichardt Jr., a managing director and senior equity research analyst with Wells Fargo Securities in San Francisco.

Michael Rehaut, an analyst with J.P. Morgan, agreed. “Overall, we view these data points as a neutral to slight positive (due to the single-family data) and continue to view the housing market as stable to slightly improving.”

Year-over-year, single-family permits were down 14.4% compared to the previous tax-credit fueled September; starts were down 10.8% on an annual basis.

Others sounded less optimistic given the generally low levels of new construction right now.

“Under normal conditions, [builders] would put up [homes at a seasonally adjusted rate of] at least 1.5 million units a month to meet demand from a growing population and to replace old and damaged homes,” noted Patrick Newport, U.S. economist for IHS Global Insight in Lexington, Mass. “Housing starts remain depressed because the jobs recession has sharply reduced the rate of household formation. According to the Census Bureau, between March 2009 and March 2010, households rose by 357,000, the smallest increase since 1947. The previous year, households increased by only 398,000, the third smallest increase on record. These are steep drops from the 2002–2007 period, when household increases averaged 1.3 million a year.”

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