Housing starts declined in July to a seasonally adjusted annual rate of 581,000 units down 1 percent from 587,000 in June, the Commerce Department said Tuesday.

The recession has cut deeply into consumer demand and access to financing. Housing starts for July were 37.7% lower than the July 2008 rate of 933,000.

The fall was led by a 13 percent drop in apartment building.

Still, construction of single-family homes increased 1 percent to the highest level since October 2008. It was the fifth consecutive monthly increase.

Meanwhile, building permit applications, an indicator of future construction, fell 1.8 percent to a seasonally adjusted annual rate of 560,000 in July and down 39.4 percent compared to July 2008 rate of 924,000.

New home construction was strongest in the Midwest and was the only region in the country with an increase in the rate of new homes being constructed, posting a 12.9 percent increase from June.

The Northeast had the biggest drop, with housing starts down 16.3 percent while the South and West suffered 1.4% and 1.6% drop respectively.