The U.S. Commerce Department released the housing market data on Tuesday. Housing starts in the U.S. climbed 6.5% to 1.206 million annualized rate in September from a 1,132 million pace in August, exceeding expectations for an increase to 1.150 million.

August's figure was revised up from 1.126 million units.

The increase was driven by rises in starts of single-family and multifamily homes.

Housing market benefits from the strengthening of the labour market.

Building permits in the U.S. declined 5.0% to 1.103 million annualized rate in September from a 1.161 million pace in August.

Analysts had expected building permits to climb to 1.164 million units.

Starts of single-family homes increased 0.3% in September. Building permits for single-family homes were down 0.3%.

Starts of multifamily buildings jumped 18.3% in September. Permits for multi-family housing slid 12.1%.