By Geoffrey Smith 

-- The number of permits given to build new houses slumped in August, as higher building and borrowing costs tempered demand, but housing starts still posted their biggest monthly gain in over a year.

Building permits fell 10% from July to 1.517 million, their lowest level in two years. However, housing starts surprisingly bounced by over 12% to 1.575 million, comfortably beating expectations for a figure roughly unchanged from July.

The rebound in housing starts is a conspicuous outlier to other recent data from the housing market, which have almost without exception shown the sector cooling off rapidly under the weight of successive interest rate hikes from the Federal Reserve and an end to the pandemic that triggered a rush for larger single-family homes with more space to accommodate remote working practices. 

Nancy Vanden Houten, an analyst with Oxford Economics, noted that that softening trend is likely to reassert itself in the coming months. 

"We look for housing starts to soften from the August pace," Vanden Houten said in a note to clients. "While a shortage of homes continues to persist, more cautious homebuilders are expected to slow the pace of construction in response to higher interest rates and a slowing economy."