New US home construction unexpectedly picked up in October, indicating builders continue to benefit from a limited supply in the resale market.

Residential starts increased 1.9% last month to a 1.37 million annualized rate, the highest in three months, government data showed Friday. Construction of single-family houses edged up 0.2%, also to the highest level since July.

Applications to build — a proxy for future construction — rose to 1.49 million. Permits to build one-family homes increased to the highest level since May 2022, while multifamily authorizations also rose.