Total housing starts rose 12.3% in August primarily due to a surge in multifamily production, according to a report from the U.S. Housing and Urban Development and Commerce Department. This is the highest level since May 2007.

“This solid report is in line with our latest survey on builder sentiment,” said Greg Ugalde, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Torrington, Conn. “However, builders continue to wrestle with affordability concerns stemming from excessive regulations and other supply-side challenges.”

The upwardly revised rate of 1.36 million starts is a seasonally adjusted annual rate of housing units builders would begin if they kept the same pace for the next 12 months.

Within this overall number, single-family starts increased 4.4% to 919,000 units. The multifamily sector, which includes apartment buildings and condos, jumped 32.8% to a 445,000 pace.

“Housing has been on an upswing in recent months as the pace of permits and starts has been rising since spring,” NAHB chief economist Robert Dietz. “While these are positive developments, single-family starts are down 2.7% year-to-date as the catch-up process continues.”

On a regional and year-to-date basis, combined single-family and multifamily starts in August rose in the South (4.4%) but declined in Northeast (1.8%), Midwest (5.6%) and West (11.3%).

Overall permits, which are a harbinger of future housing production, increased 7.7% to a 1.42 million unit annualized rate in August. Single-family permits increased 4.5% to an 866,000 rate while multifamily permits rose 13.3% to a 553,000 pace.

Looking at regional permit data on a year-to-date basis, permits rose in the Northeast (5.7%) and South (1.6%) but fell in the Midwest (6.9%) and West (5.6%).