American investors got some good news this morning as the Commerce Department reported on an unexpected jump in home-building activity in October.

Housing starts shot up 2.9% to a seasonally adjusted 1.960 million annual rate. That followed an increase of 4.0% in September to a 1.905 million rate.

The October gain came in well ahead of expectations, suggesting that home building will bolster fourth quarter GDP growth.

RBC Financial says, “Today’s number tops July’s peak of 1,890,000 and sets a new 17-year high.”

RBC notes that the increase was entirely due to single-unit starts, while multiples fell slightly over the month. And, building permit activity was also strong in October, up 5.2%, suggesting a continuation of robust building activity. And, BMO Nesbitt Burns points out that September’s starts were revised up to 1.91 million units.

“There’s little doubt that still-low mortgage rates are providing a source of support for the housing market. Thirty-year mortgage rates recently dropped to their lowest levels since July and are less than a percentage point higher than June’s record low of 5.21%,” Nesbitt says.

“The real estate market in the U.S. will continue to be a source of growth in the coming months and the strength of today’s numbers will underscore the view that the economy is en route to a sustained recovery,” RBC suggests.

Nesbitt says, “The trajectory is so strong that it implies a big rise in building activity will underpin Q4 U.S. GDP. The economy is looking increasingly steamy.”