Even as new construction activity slowed, sales of existing homes in September rebounded after two months of decline. Sales were particularly strong among first-time buyers, who took advantage of decreased competition to snap up available properties.

It was good news for the housing industry, which has struggled to gain traction as demand continues to outstrip inventory and the pace of new construction.

Overall, September's figures reveal a softening in activity throughout the industry. Residential construction statics from the U.S. Census Bureau and Department of Housing and Urban Development find new housing starts (in number of units) were down 9 percent from August and 11.9 percent from September of last year — the biggest decline in a year and a half.

Much of that decline was due to a precipitous drop in new multifamily starts, down 38 percent from August. On a more positive note, single-family starts were up 8.1 percent, at their highest level since February, and permit requests rose 6.3 percent (mostly for multifamily projects), up 8.5 percent compared to last September.

The value of construction starts also receded in September, according to Dodge Data and Analytics, after a substantial increase in August. In total, residential projects (in dollars) fell 8 percent. Again, the multifamily sector slipped further by 17 percent while the value of single-family projects dipped 4 percent.

The American Institute of Architects, which reported a weakening in billings for the second month in a row (from 49.7 to 48.4 on its Architectural Billings Index), also posted a drop in multifamily activity for the third month in a row, from 49.9 in August to 48.8 in September, a 15-month low. New project inquiries and design contracts decreased as well, signaling a slackening in demand.

In contrast, after a rather disappointing summer, sales of existing homes in September rose 3.2 percent from the month of August, announced the National Association of Realtors. It was the biggest increase since June, bringing year-to-date sales just a nose above (0.6 percent) where they were this time last year.

In keeping with the overall trend, sales of condos and co-ops eased back 3.2 percent. Purchases of single-family homes, on the other hand, jumped 4.1 percent propelled by a surge in first-time homebuyers, who accounted for 34 percent of sales. According to NAR Chief Economist Lawrence Yun, first-time homebuyers benefited from a decrease in competition from current homeowners as the late-summer home buying season began to wane.

Could this be the start of the long-awaited and much-touted influx of new buyers, especially younger buyers, into the market? Industry signals remain mixed at this point.

The wave of first-time buyers for existing properties in September, combined with the increase in new housing starts, indicates demand for single-family homes remains strong. Lack of affordable inventory and the slow pace of new construction, however, continue to hamper sales.

Two recent reports state that some would-be younger buyers are choosing to rent a single-family home because they are unable to qualify at this time to purchase one. Looking into recent home sales, Marketplace found approximately 25 percent of single-family homes in the U.S. are owned by investors and rented out, rather than occupied by their owners.

According to real estate website Zillow, nearly 14 percent of renters with good credit and who can afford to buy a home are passing on homeownership. That includes many younger renters who are putting off a family and children, delaying their need for a home, reports Construction Dive.

The National Association of Home Builders' Housing Market Index, a measure of builder confidence, registered a two-point drop in October, reflecting concerns about shortages of lots and labor that are contributing to what Yun called a "grossly inadequate" pace in new construction.

As long as the industry remains locked in this tug-of-war between demand and inventory, first-time buyers will be forced to look elsewhere for their housing needs.