US housing starts grew more than expected in July, suggesting builders are responding to strong housing demand stimulated by record low interest rates. According to a government report released on Tuesday, the number of new housing starts in July increased by 22.6% from the previous month, or an annual rate of 1.5 million units, the largest increase since October 2016. By contrast, economists forecast a median of 1.25 million units. The data in June were revised up to 1.22 million sets. < / P > < p > building permits increased by 18.8% to 1.5 million units, the largest increase since January 1990, and exceeded the level before the outbreak of the pandemic in February. Economists had previously predicted a median of 1.33 million sets. The housing market has been a bright spot in the U.S. economic recovery, as low mortgage rates make it more affordable to buy a home. The latest data highlights the rebound in the housing market, and other recent data suggest that the trend will continue, with an indicator of optimism for home builders leaping in August to level with an all-time high. < / P > < p > “record low mortgage rates and the need for households to seek more living space are driving the housing market, enough to offset the adverse effects of labor market turmoil,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez, Inc., said in a report. However, the real estate market and the economy as a whole are not without challenges. Unemployment remains high and Congress has yet to pass a new stimulus plan to support small businesses and the unemployed. The number of single family housing starts rose to an annual rate of 940000 units, the highest since February, according to a government report on Tuesday. The number of multi family housing starts, which are usually volatile and include apartments, increased by 58.4% to 556000 units, the largest monthly increase since January 2011. < / P > < p > as construction costs increase, builders may face some resistance in the coming months. Timber prices are at record highs and are likely to continue to rise as insect infestations are destroying global timber supplies. Pests have destroyed British Columbia’s log supply for 15 years, enough to build nine million single family homes.