WASHINGTON (AP) — U.S. builders started work on single-family houses last month at the fastest pace since the Great Recession began in late 2007.

Housing starts in August rose 0.2 percent to a seasonally adjusted annual rate of 1.21 million homes, the Commerce Department said Tuesday. Construction of singlefamily houses accounted for all of the gains, shooting up 12.8 percent last month to the highest rate since December 2007.

Fueled by steady job gains and low mortgage rates, total housing starts have risen 11.3 percent year-todate. The market is attracting more buyers and renters, as starts for apartment buildings have climbed 12.2 percent so far this year despite last month’s drop.

But the report also showed the potential limits of new construction as affordability pressures are multiplying in an economy with solid job growth but meager pay raises.

“It is in all likelihood going to take another leg up in new single-family home sales to sustain the pace of single family starts that was recorded in July,” said Joshua Shapiro, chief U.S. economist at the consultancy MFR.

Approved building permits decreased 16.3 percent in July to an annual rate of 1.12 million, after achieving an eight-year high in June.

The decrease likely reflects some pullback after months of gains and was caused primarily by a sharp plunge in permits to construct apartment complexes after a tax break expired in New York.

Homebuyers and renters have crowded into the housing market this year, pushing up prices to levels that have worsened affordability and placed a potential cap on sales growth.

Builders have relieved some of this financial pressure by ramping up construction, yet the increases in housing starts and building permits still lags the surging demand.

The National Association of Home Builders/Wells Fargo builder sentiment index released Monday reached 61 this month, up from 60 in July. Any reading above 50 signals expansion.

Still, only 5.4 months’ supply of new homes is available, compared to six months in a healthy market.

In the rental sector, prices are increasing at double the rate of hourly wage growth largely because of fewer vacant apartments available. Home rental prices are up 4.3 percent in the past year, according to the real estate firm Zillow. Average hourly earnings have improved a mere 2.1 percent.