Home construction increased in August as the economy and the housing industry begins to recover from its worst downturn in decades where a glut of unsold homes and record levels of home foreclosures have slowed down the industry.

Construction of single-family homes and apartments were at a seasonally adjusted annual rate of 598,000 units. This is a 1.5 percent increase from the July estimate of 589,000 and the highest level since November, the Commerce Department reported Thursday.

That was still lower than by 29.6 percent compared to the August 2008 rate of 849,000.

Applications for building permits increased, at a seasonally adjusted annual rate of 579,000, by 2.7 compared to July rate of 564,000. This is still 32.4 percent below the August 2008 estimate of 857,000.

Single-family homes permits in August were at a rate of 462,000, down 0.2 percent the revised July figure. For multi-family units, permits rose 15.8 percent.

Privately-owned homes completed in August were at a seasonally adjusted annual rate of 760,000.

This is 5.5 percent below the revised July estimate of 804,000 and is down 5.3 percent from August 2008 rate of 1,018,000.

Single-family housing completions in August were at a rate of 489,000; this is 1.6 percent below the revised July figure of 497,000.

New home constructions is still expected to rise in the next months as first time homebuyers will try to take advantage of the tax credit granted to them.