Housing starts in America surged 6.4% in October to a high for the year, suggesting home construction is helping drive economic growth, a government report showed.

Builders broke ground on 2.027 million residential units at an annual rate last month, up from a revised 1.905 million rate in September that was higher than first reported, the Commerce Department said in Washington. The level of building permits, a sign of future activity, declined 0.7% to 1.984 million.

Mortgage rates that have stayed below 6% since July are keeping interest in home buying near record levels. Today’s data suggests housing will continue to contribute to economic growth through the end of this year.

“The housing sector for the time being is still in pretty good shape,” said Jan Hatzius, a senior economist at Goldman Sachs & Co. in New York who forecast a 2.012 million rate in October. “The growth pace in housing activity has slowed down, but the level is still quite high.”

Starts were expected to rise to a 1.96 million unit rate last month, the median forecast of 65 economists in a Bloomberg News survey. Estimates ranged from 1.85 million to 2.088 million. The October rate is the highest since December’s 2.067 million.

Treasury notes rose after the Labor Department said consumer prices, excluding food and energy, rose 0.2% last month.

While the figure beat the median economist forecast, it was lower than what some traders were betting on.

The 4 1/4% note maturing August 2014 rose 1/2, or $5 per $1,000 face amount, to 100 27/32 at 1 p.m. in New York. The yield declined 6 basis points to 4.15%.

Starts of single-family homes rose 5.7% in October to a 1.645 million unit pace after a 1.556 million rate a month earlier. Starts of townhouses, apartments, and other multifamily dwellings rose 9.5% to a 382,000 annual rate.

“There is significant demand that has been relatively consistent for the last few years in almost all regions of the country that are heavily populated,” said the chief financial officer at Toll Brothers Inc., Joel Rassman, in an interview.

Toll, the biggest American builder of luxury homes, last week said backlogs in its fiscal fourth quarter rose 68% to a record $4.4 billion, or 6,883 units. Contracts signed during the period rose 61% to a value of $1.5 billion, or 2,339 units.

By region, housing starts in America rose 4% in the South to 932,000 at an annual pace; rose 5% in the West to 525,000, and rose 8.6% in the Midwest to 390,000. They surged 20% in the Northeast to 180,000, the Commerce Department said.

“Housing demand remains quite healthy,” said an economist at Dresdner Kleinwort Wasserstein in New York, Elisabeth Denison, before the report. “The housing sector is still one of the strongholds of the economy.”

Residential construction slowed to a 3.1% annual rate of increase last quarter, adding 0.18 percentage point to overall economic growth. From March through June, housing construction surged 17% and contributed 0.86 percentage point.

The economy grew at a 3.7% annual rate in the third quarter, less than expected, as rising oil prices contributed to a record trade deficit and companies added fewer inventories.

Fourth-quarter gross domestic product may rise by 3.5%, the median of 65 economists’ forecasts in a Bloomberg survey.

Hurricanes Frances, Ivan, and Jeanne, which caused millions of dollars in damage in the Southeast, may have delayed the start of some construction in September and pushed it into October.

Lennar Corp., the no. 3 American home builder, said November 4 the storms may delay 600 home sales that were expected to be completed in the company’s fiscal fourth quarter, which ends this month.

The number of homes authorized but not yet started fell 4.5% in October to 194,400. Houses already under construction last month rose 1.3% to a 1.254 million rate. Housing completions rose 2.7% to a 1.834 million rate. Single-family completions fell 0.1% to 1.538 million.