Housing starts rose 3.6 percent in June to an annual rate of 582,000 units from May's upwardly revised 562,000 units, according to new Commerce Department data that should provide encouragement to homebuilders and construction equipment manufacturers.
Single-family home starts increased by 14.4 percent last month, the biggest rise since December 2004. Single-family starts have now climbed two straight months for the first time since 2007.
"The housing starts rise is clear evidence of a rebound of demand for single-family homes," said economist Pierre Ellis, according to Reuters.
June permits to start construction also rose by 8.7 percent to 563,000 units, the highest since last December.
Both indicators suggest some robustness might be returning to the depressed home construction industry, but other signs of economic weakness continue to haunt the construction equipment industry.
Home foreclosures reached a record-high in June, according to RealtyTrac, which reported that 1.5 million homes have received foreclosure notices in 2009.
The glut of foreclosed homes on the market could suppress demand for new homes and keep housing prices down.