In another sign of possible easing in the troubled housing market, construction of new homes rose 0.3% last month from August topping analysts' estimates of a decline and reaching the highest level since April. Housing starts in September climbed to a seasonally adjusted 610,000 units from an upwardly revised 608,000 the prior month, according to the Commerce Department. Last month's rate is 4.1% higher than the 586,000 a year ago. Yesterday, HousingWire reported that residential building increased 6% in September to a seasonally adjusted annual rate of $116.7 billion, according to McGraw-Hill Construction. This in turn is spurring new confidence among homebuilders, who also saw business increase in October, according to a monthly survey from the National Association of Home Builders and Wells Fargo. Analysts surveyed by Bloomberg were expecting a decrease to 580,000 units. A poll of economists by resulted in an estimate of 555,000. Econoday's survey provided a consensus estimate of 580,000 with a range between 560,000 and 590,000. Paul Dales, U.S. economist at Capital Economics, said the incremental increase in September is better than it looks because housing starts had been revised higher in each of the previous two months. "Nonetheless, weak demand and chronic excess supply means homebuilding activity will remain subdued for a few years yet," Dales said. The rate of housing starts is now 13% higher than June, which represented the nadir since the expiration of the homebuyer tax credit, and 28% higher than the record low of April 2009. "But the key point is that starts are still incredibly low by historical standards," Dales said. "They are still an eye-watering 75% below 2006's peak and 40% below the 1 million mark that is broadly consistent with the rate of household formation and the replacement rate of existing stock. We doubt that housing starts will reach 1 million before 2015." Permits for new construction, a leading indicator of future building activity, fell about 5.6% last month to 539,000 from a revised 571,000 for August. The September figure is nearly 11% lower than 605,000 a year ago. Economists were expecting last month's permits to slip to anywhere between 555,000 and 565,000. "Overall, residential investment will not be able to drag the U.S. economy out of its current malaise," according to Dales. "At least the news that some banks have resumed foreclosure activity means that the housing recovery won't be stretched out over more years than already looked likely." On Monday, Bank of America (BAC) announced it has resumed their foreclosure operations. As did lender and loan servicer GMAC Mortgage (GJM), according to The Wall Street Journal. Write to Jason Philyaw.