June residential construction data offered a mixed bag of results in June, with housing starts beating expectations but permits sinking to an eight-month low.

The U.S. Census Bureau and Department of Housing and Urban Development (HUD) announced that privately-owned housing starts came in at a seasonally adjusted annual rate of 1.64 million units, up 6.3% from May’s figure of 1.55 million (which was revised downward from 1.57 million) and up 29.1% from June 2020’s pace of 1.28 million.

Single-family starts increased 6.3% monthly to reach a pace of 1.16 million units, while multifamily starts grew 6.2% monthly to a 483,000-unit pace.

Reuters reported that polled economists anticipated a start rate of 1.59 million units, making June’s overall pace a pleasant surprise given the material pricing and availability issues that builders have been contending with for several months. Chuck Fowke, chairman of the National Association of Home Builders, said that while the rise in construction is a good sign, the construction industry isn’t out of the woods yet when it comes to supply-side constraints.

“While lumber prices have just recently begun to trend downward, builders continue to deal with rising prices of other building materials, such as oriented strand board, and major delays in the delivery of these goods,” Fowke said. “We are thankful that the White House recently held a meeting to seek solutions to these supply chain issues that are harming housing affordability.”

June’s weakness in home permitting illustrates that such issues remain a major hindrance in remedying persistent inventory issues that have troubled a generally strong residential market. Housing units authorized by building permits, according to the Census Bureau and HUD, were at a seasonally adjusted rate of 1.60 million, 5.1% below May’s revised rate and the lowest level since October last year. It’s the straight month that permits have decreased. Single-family permits fell 6.3%, while multifamily permits backtracked 2.6%.

“The recent weakening of single-family and multifamily permits is due to higher material costs, which have pushed new home prices higher since the end of last year,” said Robert Dietz, the NAHB’s chief economist. “This is a challenge for a housing market that needs additional inventory.”