Housing starts rose to a seasonally adjusted annual rate of 658,000, compared with a revised figure for August of 572,000.
The rate of housing starts is 10.2 percent above the September 2010 annual rate of 597,000 housing starts.
Permits issued for privately owned housing units dropped 5 percent in the month to an annual rate of 625,000. A year earlier in September, 562,000 permits were issued for private projects.
Permits issued are an indicator of what direction construction starts might take one or two months down the road.
Completed housing projects in August were estimated at a seasonally adjusted annual rate of 647,000, 2.1 percent higher than the revised figure for August of 634,000 and 2.1 percent above September 2010.