As a direct result of weakening sales and tight money, housing starts fell 8 percent in October to an annual rate of 1,760,000 units, the Commerce Department reported yesterday.

The drop occurred only in the north central and western regions of the country. Starts rose in the south and northeast, with government-subsidized units an important factor in the latter region.

Separately, the department also said last month's government pay raise helped push personal income up $16.6 billion in October to a seasonally adjusted annual rate of $1.975 trillion. The September gain was $12.7 billion, just about what the October increase would have been without the government pay hike.

Forecasters generally expect housing starts to fall below a 1.5-million-unit rate sometime in the first half of 1980 as the recent big runup in interest rates takes its toll.

But throughout 1979, housing starts have remained surprisingly strong as buyers continued to be willing to pay record-high mortgage rates and savings flows remained large enough to allow lenders to keep lending.

The October drop is a result of tighter credit conditions during August and September, not the further sharp restraints the Federal Reserve put in place early in October, according to Kenneth Biederman, chief economist of the Federal Home Loan Bank Board.

According to a survey of savings and loans regulated by the FHLBB, in the two weeks following the Fed's Oct. 6 moves, 85 percent of the associations cut back on their lending commitments and 30 percent of them stopped making commitments altogether.

Since then, Biederman believes, lenders have begun making loans again, but their commitment policies are still restricted compared to what they were in August and September. In other words, a further decline in starts is likely.

Reflecting that, perhaps, the number of building permits issued last month in places that use them fell from a 1,775,000-unit rate in September to a 1,555,000 rate last month.

Starts for single-family units dropped from a 1,255,000-unit rate to a 1,148,000 rate last month, the first time in eight months the rate was below the 1,200,000 level.

The department revised upward the figure for all starts for September from a 1,881,000 rate to a 1,911,000 rates. Even the original number had surprised most housing experts since it was the second highest of 1979.

Now there may be a new surprise, Biederman said. After suffering a net outflow of savings during September and only an $800 million net inflow in October, savings and loan associations garnered more than $1 billion in new savings during the first 10 days of November, "one of the best 10 days in November we've ever recorded," he said.

Most of this money, as well as that that came in during October, was in the form of money market certificates and "jumbo" certificates of deposit.

Meanwhile, in the report on personal incomes, the department said private wages and salaries increased $6.6 billion in October compared with $11.2 billion in September. Payrolls increased less in commodity-producing, distributive and service industries.

Government pay rose $4.1 billion compared with only $600 million in September. The 7 percent raise for federal civilian and military personnel accounted for $3.4 billion of that.

Nonwage income increased $6.4 billion in October compared to $1.5 billion the month before. Much of the change was due to a swing in rental income, which rose $1.8 billion after declining $2.3 billion in September as a result of hurricane damage to dwellings.