By Xavier Fontdegloria

Construction of new homes in the U.S. increased in August, partly reversing July's decline, data from the Commerce Department released Tuesday show. Here are the main takeaways from the report:

--Housing starts, a measure of U.S. homebuilding, rose 3.9% in August compared with July, to a seasonally adjusted annual rate of 1.615 million. The reading topped the consensus forecast from The Wall Street Journal poll of economists, who expected starts to increase 1% to an annual pace of 1.55 million.

--The current level of starts is up 17.4% compared with the same month a year earlier.

--In July, housing starts stood at a revised 1.554 million from an earlier estimate of 1.534 million.

--Monthly housing starts data are volatile and are often revised. August data came with a margin of error of 11.3 percentage points.

--Residential permits, which can be a bellwether for future home construction, rose 6.0% in August on month, to a seasonally adjusted annual rate of 1.728 million. The figure is above economists' forecasts of a 2.1% decline to an annual pace of 1.60 million.

--U.S. housing starts report for August compares with September's indicator compiled by the National Association of Home Builders, which showed confidence in the single-family housing market recovering slightly from recent falls.

--Housing demand remains strong amid low mortgage rates but labor and material shortages remain widespread, pushing up both home prices and construction costs over the last year.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

(END) Dow Jones Newswires

September 21, 2021 09:00 ET (13:00 GMT)