U.S. builders started work on more single-family homes in May and requested the most permits to build homes in three and a half years.
The increase suggests the housing market is recovering even as other areas of the economy weaken.
The Commerce Department says single-family construction increased 3.2 percent in May, the third straight monthly increase.
Overall housing construction fell 4.8 percent because of a 21.3 percent plunge in apartment construction, which can be volatile.
Housing starts dropped to a seasonally adjusted annual rate of 708,000 units in May, down from an upwardly revised rate of 744,000 in April -- the fastest building pace since October 2008.
But permits to build homes rose to a rate of 780,000 -- the best since September 2008.
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