The number of new housing starts in the United States rose faster than expected in August, driven by multi-family housing projects, but the backlog of orders is still serious.

Housing starts rose 3.9% in August, to an annualized rate of 1.62 million units, according to government data released on Tuesday. The number of new housing starts in July was revised up. Economists surveyed by Bloomberg expect a median of 1.55 million sets in August.

New starts of multi-family housing increased by 20.6% to 539000 units. The number of single-family housing starts fell for the second month in a row, equivalent to an annual rate of 1.08 million units.

The data show that builders continue to face a limited supply of land, labour and raw materials. These factors have led to a decline in housing starts from a 15-year high hit in March. Despite bottlenecks, new housing starts are still largely higher than before the outbreak, which is expected to keep construction activity high for some time.

The report also showed that the backlog of orders continued to rise, with the number of single-family homes under construction but not yet completed rising to the highest level since 2007. The number of houses approved but not yet under construction has risen to the highest level since 1979.

Meanwhile, building permits rose 6 per cent in August, the biggest increase since January, reflecting a sharp increase in multi-family homes. The number of permits for single-family homes also increased slightly.