U.S. housing starts rose unexpectedly in September, but the strength isn’t expected to last long.

U.S. housing starts rose 1.7%, to 1.57 million units in September. Economists were expecting starts to fall in the month. Both single- and multi-family starts rose.

BMO Nesbitt Burns notes that the report did not show any direct impact of the events of September 11 because the starts largely reflect prior sales, and work crews would have been influenced very little by the events last month.

“This report would appear to support the view that low mortgage rates, a still-low rate of unemployment and favourable affordability are continuing to prop up the housing market. But, behind the scenes, cracks are starting to appear,” says BMO. Notably, building permits slipped 3%, to 1.52 million units, their lowest level since December 1997.

“Housing has remained one of the few bright spots in the economy. But, as the economic slowdown spreads and deepens, the housing market will also succumb to the weakness,” concludes BMO.