After falling to a three-month low in August, housing starts rose to a seasonally adjusted annual rate of 1,206,000 in September, 6.5% above August’s revised estimated of 1,132,000, the Census Bureau and the Department of Housing and Urban Development said Tuesday.

September’s housing starts also printed at a rate 17.5% above the September 2014 rate of 1,026,000.

According to Stifel Nicolaus & Co Chief Economist Lindsey Piegza, September’s housing start rate was a three-month high and the second highest level in more than seven years.

While housing starts rose, building permits came in at a seasonally adjusted annual rate of 1,103,000, which is 5% below the revised August rate of 1,161,000.

“A bit of a mixed report this morning,” Piegza said. “Construction activity continues to boom throughout the end of the third quarter with the highest level of new starts since June. As seen yesterday, with a decade-high in confidence, builders are elated with the continuation of low interest rates (for now) and remain optimistic regarding continued, heightened demand in the housing market.”

The rate of building permits is 4.7% above the September 2014 estimate of 1,053,000, but Piegza said that the decline from August is potentially concerning news.

“The larger-than-expected decline in permits, however, suggests the anticipation of further momentum in the U.S. housing market may fall short of expectations with a slower pace of activity coming down the pipeline.” Piegza said.

“Furthermore, multifamily construction remains the name of the game with the majority of new projects focused on rental, condo, and co-op units, a reflection of both a change in preferences, as well as a declining ability to afford a home with stagnant wages,” Piegza added.

Additionally, privately owned housing completions in September were at a seasonally adjusted annual rate of 1,028,000. This is 7.5% above the revised August estimate of 956,000 and is 8.4% above the September 2014 rate of 948,000.

Single-family housing completions in September were at a rate of 643,000; this is 1.8% below the revised August rate of 655,000. The September rate for units in buildings with five units or more was 378,000.

“With the expectation of a near-term rate increase(s), borrowing costs are anticipated to begin a gradual ascent, making financing a home purchase more difficult for many Americans, thus fueling an appetite for smaller purchase or alternative rental options,” Piegza said.

On the other hand, Quicken Loans Vice President Bill Banfield said that the increase in September’s housing starts is good news and cites Tuesday’s positive homebuilder confidence report as an indication that the permit decline may be a momentary blip.

“September’s rise in housing starts, after a small hiccup last month, is a testament to the overall momentum and progress the housing market has made in 2015,” Banfield said. “While this growth was led primarily by multifamily homes, continued builder confidence provides opportunity for an increase in construction of single-family homes.”