U.S. builders broke ground on new homes in October at a faster pace than expected, the government said on Monday in a report that showed the housing market was displaying resilience in a sagging economy.

However, the number of new permits issued last month dropped to the slowest pace in nearly four years, a sign that the market could weaken in the future.

The Commerce Department said U.S. housing starts hit a seasonally adjusted annual rate of 1.552 million units, outpacing the 1.513 million projected by U.S. economists in a Reuters survey. But starts were down 1.3 percent from the rate of 1.572 million recorded in September.

Housing permits fell 3.6 percent to an annual rate of 1.473 million in October, the weakest pace since December 1997.

In September, permits had come in at 1.528 million.

Housing starts and home sales have been strong throughout the year despite a gloomy picture elsewhere in the economy.

But analysts have expressed worry that mounting layoffs and consumer uncertainty in the aftermath of the Sept. 11 attacks could undermine some of the vigor in the housing market.

Regionally, housing starts in the Midwest during October showed the most strength, rising 14.3 percent. In the Northeast, they rose 5.3 percent. Starts were flat in the South and plummeted 16.7 percent in the West.

Permits rose 9.9 percent last month in the Northeast. But they fell in all other regions of the country, down 11.4 percent in the West, 4.2 percent in the Midwest and 1.6 percent in the South.