WASHINGTON—U.S. housing starts rebounded in June, promising to help ease a national shortage of single-family homes and restrain price growth in the coming months.

Housing starts rose 8.3% in June from the previous month to a seasonally adjusted annual rate of 1.215 million, the Commerce Department said Wednesday.

Residential building permits, which can signal how much construction is in the pipeline, increased 7.4% to an annual pace of 1.254 million last month. That was the largest one-month jump since November 2015.

“This is one of the best new housing construction reports that I’ve seen in a while,” said Ralph McLaughlin, chief economist at Trulia.

Starts data are volatile from month to month and are subject to large revisions. The 8.3% gain in starts came with a 15.8-point margin of error.


The pace of construction had been sluggish in recent months, with starts declining in the previous three months, and permits down in April and May.

But economists said that was likely because a warm winter pushed up some activity by a month or two and that the overall trend remains toward continued improvement in the construction sector.

“Housing has been a major concern as construction was on the downslide through the spring. That pattern was broken as builders picked up the pace quite sharply in June,” said Joel Naroff, president and chief economist of Naroff Economic Advisors.

Overall, home construction showed strong momentum in the first half of the year. Housing starts in the first six months of 2017 were up 3.9% from the same period in 2016. Permits during this period increased 6% from a year earlier.


Starts rose 6.3% in June for single-family construction and increased 13.3% from May for multifamily construction. Permits last month were up 13.9% for buildings with multiple units and up 4.1% for single-family homes.

The increase in single-family starts bodes well for home buyers struggling to find properties to buy. The number of homes on the market has fallen year-over-year for 24 consecutive months, according to the National Association of Realtors, helping drive prices up much more quickly than incomes.

The increased pace of multifamily construction could create additional challenges for apartment landlords, who already are struggling with tepid rent growth and rising vacancies due to an increase in rental units. The national vacancy rate climbed to 4.4% this spring from 4.2% a year earlier, according to data released by Reis Inc. this week. Average rents across the U.S. increased 3% year-over-year in the second quarter to $1,335 a month, the smallest year-over-year increase since 2011.

“I wouldn’t be surprised if we continued to see rents moderate,” Mr. McLaughlin at Trulia said.


Still, economists said it is likely to be months if not years until housing supply and demand reach an equilibrium, as labor and land shortages continue to slow construction.

“We’re not going to see a boom in housing supply. I think it’s going to be continued gradual improvement,” said Gus Faucher, chief economist at PNC Financial Services.

Write to Laura Kusisto at laura.kusisto@wsj.com and Sarah Chaney at sarah.chaney@wsj.com