Housing starts dropped a lot further than forecasted, declining to a seasonally adjusted annual rate of 1.06 million in October, which is 11% below September’s revised estimate of 1.19m the Census Bureau and the Department of Housing and Urban Development said Tuesday.

This is 1.8% below the October 2014 rate of 1,079,000.

Lindsey Piegza, Stifel Nicolaus & Co Chief Economist, commented on the data saying, “Housing starts fell nearly triple the expected decline, down 11% in October, the largest monthly decline since February, and pulling the annualized rate of starts down from 1,191k to 1,060k, the slowest pace in seven months.”

On the other hand, building permits in October were at a seasonally adjusted annual rate of 1.15m up 4.1% from the revised September rate of 1.11m This is also 2.7% above the October 2014 estimate of 1.12m.

Piegza noted that this rise nearly offset the 4.8% drop the month prior.

“Month-to-month volatility remains escalated in the housing market particularly on the supply side. Earlier gains this year have since been erased with starts still bouncing around the 1 million unit mark,” said Piegza.

However, Quicken Loans Vice President Bill Banfield wasn't as pessimistic on the data saying,  “I wouldn’t look too much into October’s dip in housing starts, as we continue to remain above 1 million units. We should focus on the positives, such as the rise in building permits. Ups and downs aside, we continue to feel optimistic about the sustainability of the housing market.”

“This is the housing starts roller coaster. The trend here is still up nicely from last year. The housing starts number is one of the most volatile and often revised statistics we see in the industry. In fact, the margin of error on this October monthly figure is greater than the change from September. As always, we’re taking a long term view and we’re very comfortable with the market at this point,” said Stephen Phillips, president of Berkshire Hathaway HomeServices, also commenting on the results.

In addition, privately owned housing completions in October were at a seasonally adjusted annual rate of 965k, down 6% from the revised September estimate of 1,03m.

Single-family housing completions in October were at a rate of 640k, down 0.5% from the revised September rate of 643k. 

“Still on an upward trajectory, construction activity will continue to reflect the market’s ability to absorb new housing units. Many cities, eager to ramp up the number of multi-family dwellings as a result of changing preferences particularly among the younger Americans, have cooled activity in the wake of still-high vacancy rates heading into year-end,” Piegza added.  

However, she said, “Single-family activity remains moderated by still less-than-impressive job creation and minimal income gains.”

Looking ahead, Piegza said, “With a rate hike becoming an increasingly likely possibility near-term, a rising rate environment will likely temper demand for housing further without an equally large offset increasing consumers ability to finance a home purchase.”

In November, speaking before the House Financial Services Committee, Fed Chair Janet Yellen formalized the possibility of a rate hike in December, telling the Committee that December’s meeting is a “live possibility” for a rate increase.

The next Federal Open Market Committee meeting is scheduled for Dec. 15-16.