Newly released data from the U.S. Department of Housing and Urban Development and the Commerce Department shows total housing starts dropped 5.3 percent in September to a seasonally adjusted annual rate of 1.2 million units. This is mainly due to the drop in multifamily production.

The 1.2 million reading shows how many housing units builders would start in the next six months if these numbers remained stagnant. Contained within the overall number, single-family starts dropped 0.9 percent to 871,000 units while multifamily starts fell 15.2 percent to 330,000.

Overall permits dropped 0.6 percent in September, also due to the multifamily drop. Multifamily permits fell 7.6 percent to 390,000 units while single-family permits rose 2.9 percent to 851,000 units.

“Housing starts are in line with builder sentiment, which shows that builders are overall confident in the housing market but continue to face supply-side challenges,” says NAHB chairman Randy Noel. “Though lumber prices have declined recently, builders remain concerned about labor shortages, especially as the number of unfilled construction jobs has reached a post-recession high.”

“This report is consistent with our forecast for gradual strengthening in the single-family sector of the housing market following the summer soft patch,” says NAHB chief economist Robert Dietz. “A growing economy coupled with positive demographics for housing should keep the market moving forward at a modest pace in the months ahead.”

Regionally, September saw a rise in combined single-family and multifamily housing starts with numbers up 29 percent in the Northeast and 6.6 percent in the West. Starts dropped 13.7 percent in the South and 14 percent in the Midwest.

Permit issuance rose 11.1 percent in the West and 0.6 percent in the South, while permits were down 9.8 percent in the Northeast and 18.9 percent in the Midwest.