WASHINGTON, DC - Single-family homes and apartment construction starts rose to an annual rate of 700,000 units in January, says the U.S. Commerce Department, a 1.5 percent increase.

Regionally, the South, the largest regional market, posted the biggest gain in housing starts, up 18.3 percent. The West rose 11.9 percent; the Northeast 7.9 percent. The Midwest fell 40 percent.

Home builders were cheered by the figures, which are the second second-best pace of overall housing production since October of 2008, and come atop upwardly revised figures for previous months. The builders confidence has been rising for five months.

“Today’s solid housing starts report indicates that builders are putting more of their crews back to work, and adds to the growing field of evidence that the overall housing market is gradually but consistently moving in the right direction,” said Barry Rutenberg, newly elected chairman of the National Association of Home Builders. Rutenberg is president of Barry Rutenberg and Associates, Inc. in Gainesville, FL, which has developed more than a dozen communities and 1,000 homes in the Gainesville area.

Builder surveys have indicated steadily increasing optimism regarding market conditions while the number of improving housing markets nationwide has grown substantially over the past six months.

The shift "is indicative of a solid recovery in housing activity stemming from recent firming in employment and consumer confidence measures,” says NAHB chief economist David Crowe. “Challenges remain for home builders in terms of tight credit conditions, difficult appraisals and the continued flow of foreclosed properties on the market.”

Single-family building permits, an indicator of future construction activity, increased 0.9 percent increase in January to 445,000 units – the best pace since April of 2010. Multifamily starts rose 8.5 percent to a seasonally adjusted annual rate of 191,000 units for the month; multi-family permits edged up 0.4 percent to 231,000 units.