Due to a decline in multifamily production, total housing starts fell 4% in July to a seasonally adjusted annual rate of 1.19 million units from a downwardly revised reading in June, according to a report from the U.S. Housing and Urban Development and Commerce Department.

The July reading of 1.19 million starts is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts increased 1.3% to 876,000 units. The multifamily sector, which includes apartment buildings and condos, fell 16.2% to a 315,000 pace.

“Despite housing affordability headwinds, builders remain confident about the market and this is reflected in recent modest gains in single-family starts,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn.

“Permits bottomed out in April and single-family starts hit their low point in May, and now we are starting to see the gradual improvement in the market that we’ve been forecasting,” said NAHB Chief Economist Robert Dietz.

On a regional and year-to-date basis, combined single-family and multifamily starts in July rose 3.7% in the South. Starts declined 5.7% in Northeast, 7.9% in the Midwest and 12.3% in the West.

Overall permits, which are a harbinger of future housing production, increased 8.4% to a 1.34 million unit annualized rate in July. Single-family permits edged 1.8% higher to a 838,000 rate while multifamily permits jumped 21.8% to a 498,000 pace.

Looking at regional permit data on a year-to-date basis, permits rose 2.4% in the Northeast. Permits fell 7.1% in the Midwest, 0.1% in the South and 6.8% in the West.