The Commerce Department said Friday housing starts climbed to 999,000 on a seasonally adjusted rate in September from 920,000 the prior month. Multi-family starts leapt 26%, while the increase was just 1% for single-family homes. Observers had projected housing starts would total 1.01 million in September, according to a survey conducted by Bloomberg.

Almost all of the growth in September came from structures with five or more units. Numbers for August were revised up slightly, but still showed a steep drop.

The housing sector’s recovery has been constrained by tight lending standards, which are especially problematic for potential Millennial home buyers that on average hold a lot of student debt. And in a sign that some are still worried about the strength of the housing market, builder confidence in the market for newly built single-family homes tumbled in October, ending a streak of four consecutive monthly gains.

“There are still a lot of headwinds for the ownership market,” said Gleb Nechayev, senior managing economist at CBRE Econometric Advisors.

Nechayev said as the labor market improves and wages begin to strengthen, there should be a pickup in the sale of single-family homes.

Home builders are also hopeful that pent-up demand will eventually lead to a sharper pickup in demand. Robert I. Toll, chairman of Toll Brothers (TOL), last month said that the industry should be building 50% more homes this year than its current pace to meet the increased population demographics.

“At some point, this pent-up demand will be released, which will add momentum to the entire housing market,” Toll said.

Newly authorized building permits in September were at a seasonally adjusted annual rate of nearly 1.02 million, up just 1.5% from the prior month and slightly missing expectations.