According to the U.S. Department of Housing and Urban Development and the Commerce Department, nationwide housing starts rose 4.8 percent in June to a seasonally adjusted annual rate of 1.19 million units. Overall permit issuance increased 1.5 percent to a seasonally adjusted annual rate of 1.15 million.

“This month’s uptick in production is an indicator that the housing market continues to move forward,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “At the same time, builders are adding inventory at a cautious pace as they face lot shortages and regulatory hurdles.”

“The June report is consistent with our forecast for a gradual but consistent recovery of the housing market,” said NAHB Chief Economist Robert Dietz. “Single-family production should continue to strengthen throughout the year, buoyed by job growth, new household formations and low mortgage interest rates.”

Single-family housing starts rose 4.4 percent to a seasonally adjusted annual rate of 778,000 units in June while multifamily production ticked up 5.4 percent to 411,000 units.

Regionally in June, combined single- and multifamily starts increased in the Northeast and West, with respective gains of 46.3 percent and 17.4 percent. The Midwest registered a 5.2 percent loss and the South fell 3.4 percent. However, single-family production rose in all four regions.

Both sectors posted permit gains. Single-family permits edged up 1 percent to a rate of 738,000 while multifamily permits rose 2.5 percent to 415,000.

Permit issuance increased 9.4 percent in the Northeast and 8.3 percent in the South. Meanwhile, the Midwest and West registered respective losses of 2.8 percent and 10.1 percent.

According to chief economist Jonathan Smoke, “Today’s headline numbers seem encouraging, with monthly increases in new construction, but the construction of multi-family housing is slowing and we are still not seeing the growth needed to address inventory challenges. The June data points on new construction show little change from what we have already observed during the spring and summer, and continues to indicate that builders are starting what they already permitted earlier this year but are not being bullish about demand for this fall and winter.”

Smoke continued, “We are continuing to see that new construction is failing to keep up with household formation, so the low vacancies in rentals and the dearth of homes for sale will continue to provide a solid foundation for rising rents and home prices.”