In September, single-family home building increased 1.7 percent, while apartment building jumped 53.4 percent.

Builders began work on a seasonally adjusted 658,000 homes in September. While that marks a big improvement, the level still remains only about half of the 1.2 million pace that economists consider healthy for the new-home sector.

Builders are continuing to struggle to compete against heavily discounted foreclosures and short sales that are plaguing many markets.

Building permits, which serve as a measure of future building, dropped 5 percent in September, the Commerce Department reported.

Yet, builders seem to be getting more optimistic that the new-home market is showing signs of improvement. The National Association of Home Builders reported on Tuesday that industry sentiment rose in October to 18, the highest level in over a year. However, overall sentiment about the industry remains low--any reading below 50 indicates negative sentiment about the housing market (a level that hasn’t been reached since April 2006).

Source: “September Home Building Rose 15%, But Permits for Future Homes Fell 5%” Associated Press (Oct. 19, 2011)