Builders reported increased demand for housing in June – driven by strong single-family production.

Total housing starts soared 17.3% last month to a seasonally adjusted annual rate of 1.19 million units, according to a report from the US Housing and Urban Development and Commerce Department. If this pace continues, builders will begin 1.19 million units in the next 12 months.

“Fueled in part by record-low mortgage rates, builders are seeing solid demand for housing despite the challenges of the virus and elevated unemployment,” said Chuck Fowke, chairman of the National Association of Home Builders. “Demand is growing in lower-density markets, including exurbs and small metros.”

Within the overall June reading, single-family starts were running at an 831,000 seasonally adjusted annual rate, up 17.2% from an upward revision from the May estimate. The multifamily sector, meanwhile, jumped 17.5% to a 355,000 pace.

Regionally, combined single-family and multifamily starts were up 2.2% year to date in the Midwest, up 0.2% in the South, up 2.9% in the West, and down 5.4% in the Northeast.

Overall permits rose 2.1% to a 1.24million-unit annualized rate in June. Single-family permits posted an 11.8% increase, up to an 834,000 unit rate, while multifamily permits saw a 13.4% drop to a 407,000 pace.

Looking at regional permit data on a year-to-date basis, permits were 3.4% higher in the South, 8.8% lower in the Northeast, 2.3% lower in the Midwest, and 3.9% lower in the West.

“Single-family construction is expanding off April lows due to lean inventories of new and existing homes,” said NAHB Chief Economist Robert Dietz. “However, builders face challenges in growing costs, particularly rising prices for lumber.”