Residential construction starts in the United States during August rose on strength in the single-family home market, but underlying weakness in housing is still spilling into the overall economy.

The U.S. Commerce Department reports total housing starts increased 0.9% from the downwardly revised July level to an annual rate of 891,000. The August level is 19% higher than the same time a year ago.

Single-family starts increased 7% to 628,000, the highest in six months, while multi-family home starts declined 11%

An indicator of future building activity, new building permits issued, declined 3.8% overall in August from the month before to an annual rate of 954,000, nearly reversing the 3.9% increase the month prior. Compared to the same time a year ago the level is 11% higher while on a three-month average, permits have slowed for the second consecutive month to 930,000. Single family permits rose 3% in August while multi-family permits fell 15.7%.

Sterne Agee chief economist, Lindsey Piegza described the report as less than stellar and falling short of expectations. “The most apparent weakness is in the multi-unit sector, but momentum in the single family market too has been losing momentum as builders remain cautious in a rising rate environment,” she says. “Increasing financing costs are expected to curtail demand for new construction and limit activity in the second half of the year.”

While the housing market has picked up dramatically since the “Great Recession” its level is still short of the high level it was at before the economy went south. Dean Baker, director of the Center for Economic Policy and Research, says the current housing market is the reason the U.S. economy hasn’t been any stronger and before the recession, housing was driving the economy.