By Ruth Mantell
WASHINGTON (MarketWatch) — Construction on new U.S. homes rose 3.6% in October to a seasonally adjusted annual rate of 894,000, the highest rate since July 2008, the U.S. Department of Commerce reported Tuesday. Due in part to disruptions from Hurricane Sandy, economists polled by MarketWatch had expected a decline in housing starts to a rate of 825,000. However, Hurricane Sandy had a minimal effect because it hit only a small part of the country at the end of the month, government analysts said. By region, starts in October fell 6.5% in the Northeast and 2.5% in the South, while rising 8.9% in the Midwest and 17.2% in the West. Meanwhile, building permits, a sign of future demand, declined 2.7% to a rate of 866,000. Permits for single-family homes rose 2.2% to an annual rate of 562,000 last month, while permits for structures with at least two units fell 10.6%. Starts are up 42% from last year, though the rate remains far below a bubble peak of almost 2.3 million in 2006.