Reuters reports housing starts rose more than expected in September, driven by high demand for rental units.

Groundbreaking increased 6.5% to a seasonally adjusted annual pace of 1.21 million units, the Commerce Department said on Tuesday. It was the sixth straight month that starts remained above 1 million units, pointing to a sustainable housing recovery. Starts increased to a 1.13 million-unit rate in August. Economists polled by Reuters had forecast groundbreaking on new homes rising to a 1.15 million-unit pace last month."

Housing starts had slipped the previous two months. The 6.5% increase brought things back to cycle highs, which as Zero Hedge points out, happened right before the last recession.

Reuters called housing "one of the few bright spots in the economy."

If you dig deeper into the numbers the brightness begins to fade a bit. There are reasons to believe prospects for the housing sector aren't quite as shiny as the mainstream media makes out.

While housing starts rose, the number of building permits fell 5.0% to a 1.10 million-unit rate in September, the lowest in seven months. A sharp drop off in multi-family permits drove the drop. They hit the lowest level since 2014.

As Zero Hedge points out, the drop in multi-family permits is a bad omen.

This likely means that rents will continue rising to recorder levels for the foreseeable future as the relentless demand for rental housing will not be satisfied for a long time."