Further evidence that the market for new homes is slowly emerging from torpor came in the Commerce Department's report on September new home construction Tuesday, which reported a 0.3% rise in overall starts and a 4.4% increase in single-family construction.

Starts of all kinds rose to a seasonally adjusted annual rate of 610,000, well above the consensus Wall Street estimate of 580,000 and a high since government home-buying incentives were discontinued in April. Single-family starts were at a rate of 452,000, up from 433,000 in August and the highest since May.

The single-family increase, however, was due in large part to a 66.7% increase in the Northeast, a region where a small government sample size routinely results in wide swings in data. That increase compares to a drop of 8.2% in the Midwest; a flat reading in the South and a gain of 2.3% in the West.

In overall starts, the Northeast was up 2.9%, the Midwest down 8.2%, the South up 4.8% and the West down 3.6%.

The overall starts number was retarded by a 6.8% drop in multifamily construction and by an upward revision of 2,000 units in August. Still, starts remained 4.1% ahead of September, 2009 as multifamily was up 114.3% and single-family, compared to the tax-credit fueled market of a year ago, was down 10.8%.

Likewise, permits in September were boosted by a larger reading in the Northeast than elsewhere. Overall, permits were down 5.6% from August to 539,000, 10.9% below the same month in 2009, driven down by a 26% decline in multifamily to 111,000. But for single-family, permits were up 0.5% to a rate of 405,000, 14.4% behind September last year.

Again, the Northeast was a prominent factor, with overall permits down 1.5% but single-family up 9.5% to a rate of 46,000, 6.1% behind the pace of September, 2009. The Midwest was down 4.3% overall and flat for single family from August and down 14.6% year-over year. The South was down 4.7% overall ands down 1.4% in single-family, down 13.9% and 16.7%, respectively, year-over-year. The West was down 10.6% overall and up 1.2% for single-family and down 4.1% and 14.3% respectively on a year-to-year comparison.

Not seasonally adjusted, 54,000 homes were started in September, down from 55,500 in August, with 40,000 single-family starts, up from 38,900.

In a research note, Michael Rehaut at J.P. Morgan Securities said, "Overall, we view these data points as a neutral to slight positive (due to the SF [single-family] data), and continue to view the housing market as stable to slightly improving."