In another sign the sizzling housing market has begun to cool nationally, the Commerce Department said yesterday that October housing starts fell 5.6 percent from September, while permits for future building slid at the fastest rate in six years.

The decline in the pace of construction came as mortgage rates were climbing.

"The evidence continues to mount that the boom is waning," said Scott Anderson, senior economist for Wells Fargo & Co. in Minneapolis.

"We've been looking for a slowdown in the market as short-term mortgage rates get higher," said Anderson. "We are getting anecdotal evidence of slowing."

Anderson cited a decline in a market gauge by the National Association of Home Builders and Wells Fargo. He also pointed out that the chief economist for the National Association of Realtors said earlier in the week that U.S. home sales probably peaked in the third quarter. And recently Toll Brothers, one of the nation's leading builders of luxury homes, lowered its earnings forecast.

Anderson predicted more weakness in November and even into the first quarter of 2006. "House prices are not going to have double-digit increases" as in past years, he said. He expects home appreciation to slow to 3 to 5 percent in 2006.

Builders broke ground last month on a seasonally adjusted annual rate of 2.014 million homes. There were 2.3 percent fewer starts than in October 2004.

Construction dropped in all four regions of the country. Starts were down 10.8 percent in the West to 511,000 units; 10.5 percent in the Midwest to 333,000; 7.5 percent in the Northeast to 172,000; and 0.5 percent in the South to 998,000.

October permits to build sank 6.7 percent from September, to an annual rate of 2.07 million. But permits were down only 1.1 percent from the number in October 2004.

Anderson suggested there may be a silver lining to a "softening" housing market.

"I think it is a good thing," he said, especially if more investment is directed from housing into other industries. He said this would help produce a "more broad-based recovery and more balanced growth."

Stephen East, home-building analyst for Susquehanna Financial Group in Bala Cynwyd, Pa., cautioned about reading too much into one month's report.

"The single-family numbers are still showing solid year-over-year growth on both permits and starts," he said. "Month-to-month volatility often clouds overall trends."