IS THE FED TAPERING TO EFFECT US HOUSING MARKET

Some economists said the housing data, combined with stronger-than-expected October nonfarm payrolls and retail sales reports, raised the risk the Fed could scale back its massive monthly bond purchases as early as December.

"The jump in building permits means that another obstacle to tapering is now removed," said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.

"The weakness in housing starts and new home sales were probably one important reason - besides the slowdown in payroll gains - why the Fed did not taper in September."

The U.S. central bank noted at last month's meeting that the recovery in the housing sector had slowed somewhat in recent months. Fed policymakers next meet on December 17-18.

The strong march in house prices, rising stock market prices and improvements in job gains are not helping to lift household spirits, which could be a challenge for retailers during the holiday shopping season.

In a third report, the Conference Board said its index of consumer attitudes fell to 70.4 this month from 72.4 in October. Consumers' labor market assessment was little changed.

But while building permits are not counted in gross domestic product (GDP), they are a key indicator of economic activity and the sturdy gains in both September and October should ease concerns the housing market recovery was stalling.

"The building permits reports suggest some upside risks to GDP growth in the coming quarters from construction activity," said Millan Mulraine, senior economist at TD Securities in New York.

Though higher mortgage rates have slowed the pace of home sales, demand for accommodation as household formation continues to recover from multi-decade lows is expected to keep supporting residential construction.

Permits for the multifamily home sector surged 15.3 percent in October and approvals for buildings with five units or more reached their highest level since June 2008. Single-family home permits, the largest segment of the market, rose 0.8 percent.

The Commerce Department postponed the release of figures on housing starts and completions for September and October until December 18 because the collection of data was affected by the 16-day shutdown of the government last month.

November data also will be published at that time. The partial shutdown of the federal government also delayed the publishing of the September and October permits reports.