U.S. housing starts logged their biggest gains in more than seven years in September, the government reported Thursday, as droves of buyers seized on decades-low interest rates to buy homes.

Ground breaking for new homes jumped 13.3 percent to a seasonally adjusted annual rate of 1.843 million units last month — the highest level since June 1986 — from an upwardly revised 1.627 million rate in August. It was the biggest monthly increase since a 14.1 percent climb in July 1995.

Single-family home starts hit their fastest rate since November 1978. The Commerce Department said the big surge was due to a draw-down of the August single-family inventory of housing that had been authorized but not started.

"Housing starts are extremely strong, just through the roof. They are not consistent with fears of a double-dip recession, and add to the case for the Fed remaining on the sidelines through November and December," said Sean Callow, a foreign exchange analyst for IDEAGlobal in New York.

Building permits, an indication of builder confidence and a gauge of future strength, rose 3.7 percent to 1.727 million units from 1.666 million units the preceding month.

The starts forecast far exceeded expectations of analysts polled by Reuters, who had forecast a 1.636 million level. September's sudden upswing comes after three months of consecutive declines.

Single-family housing starts, the biggest category of building, rose to a 1.477 million unit annual rate, a level not seen since the administration of President Jimmy Carter. Multifamily starts fell 4.4 percent.

Starts gained across the country, rising 9.5 percent in the Northeast, 9.8 percent in the South, 11.4 percent in the Midwest and 24.2 percent in the West.

Commerce said developers' inventories of single-family houses permitted but not started hit the highest level in more than 15 years in August — 101,000 units. However, that level dropped to 90,600 units in September.

That reduction in inventories helped boost the single-family starts number in September, Commerce said.

The housing market stood up well in the U.S. economic downturn and through the slow recovery, producing record levels of sales and mortgage lending as interest rates on the popular 30-year fixed-rate mortgage scraped lows unseen since the mid-1960s.

Economists have been forecasting that 2002 will be an all-time record home-selling year.