US housing starts grew in September but the pace was softer than anticipated while permits for construction fell sharply, government data showed today, underscoring ongoing woes in the ailing sector.

The Commerce Department said that construction starts on privately owned homes rose 0.5% to 590,000 from the revised August estimate of 587,000. It was, however, lower than expectations of 610,000 by private economists.

Permits to build new homes, a leading indicator of the sector, fell 1.2% to 573,000 from the revised August rate of 580,000. Most economists had expected 595,000 permits for September.

The report highlights fresh weakness in the housing sector, which has been at the epicentre of the global financial crisis since the collapse of a US property market bubble.