Image copyright Getty Images Image caption The residential building market has been struggling to get traction in recent months
U.S. housing starts rose in August at their fastest pace in three months, posting a 1.1% increase in groundbreakings, although permits also increased.
The Commerce Department said the biggest gain was in single-family home construction.
The gains were not as strong as many economists had expected.
Building permits, a sign of future construction, rose 0.8% in August to an annual pace of 1.247 million.
Almost every month since February has seen net gains in total housing starts.
‘Much less poor’
On Wednesday, the Census Bureau reported a 2.4% rise in May in housing starts, revised to a 4.5% increase from the previously reported 4.0% rise.
“We had been afraid of that slowing in the spring, but we’re more encouraged by today’s report,” said Ted Wieseman, an economist at Morgan Stanley.
He said August showed a somewhat stronger build-up of a “housing bust” than previously believed.
“Lending standards today are much tighter than they were in the heady days of 2006 when building activity was in triple digits,” he said.
Mr Wieseman added that today’s numbers showed “the process of righting the ship is underway, but it’s not back to normal yet.”
Plans to build single-family homes rose 1.2% to 1.371 million, while building for multi-family units increased 3.3% to 423,000.
Consequently, the demand in the single-family sector to buy homes is up by just 1.4%, which isn’t quite the level that builders would like.
“The pace of single-family starts also fell short of our estimate, but the decline was relatively modest,” said Kevin Cummins, economist at US Bancorp.
“Modest increases in permits suggest continuing but not robust growth in new home sales.”
The market has been showing strength amid falling unemployment and overall strong economic growth but some analysts warn that construction remains shaky.
It is considered the sector to provide the earliest signs of an economic upturn and downturn.
In July, builders started work on 1.266 million homes, up 1.7% from the 1.230 million homes built in June.
That was an increase of 15.7% from a year earlier, but it still remained below the 1.42 million starts recorded in July 2017, the highest annual pace since 2007.
While permits to build more homes rose 2.4% in July, to 1.229 million, they still trailed June’s record 1.29 million.
Market data has been caught up by a federal investigation into practices at Fannie Mae and Freddie Mac – a concern for many homeowners.