WASHINGTON—Construction of single-family homes in the U.S. rose to a nearly five-year high in February, the latest sign of an improving housing market.

Single-family home building, which made up two-thirds of housing starts last month, increased 0.5% in February to a rate of 618,000 units, the highest level since June 2008. Single-family home construction has risen 31.5% in the last year.

Overall housing starts rose 0.8% in February to a seasonally adjusted annual rate of 917,000, the Commerce Department said Tuesday. January's figures were revised upward to a rate of 910,000. February's level matched economists' expectations.

Meanwhile, the number of new building permits, an indication of future construction, rose 4.6% to an annualized level of 946,000 in February, also the highest level since June 2008. That was above economists' estimates for a rate of 925,000.

Improvements in the housing market will be one of the main drivers of the economy this year, economists believe. Investments in residential projects and home improvements have contributed to overall economic growth for seven consecutive quarters.