WASHINGTON — U.S. home construction increased 3.9% in August with the strength coming in apartment construction.

The August increase left home construction at a seasonally adjusted annual rate of 1.62 million units, 17.4% above the pace of a year ago, the Commerce Department reported today. Housing starts had fallen 6.2% in July.

The August strength came in a 21.6% jump in construction of apartment units which offset a 2.8% fall in construction of single-family homes.

Applications for building permits, seen as a good sign of future activity, rose 6% to a seasonally adjusted annual rate of 1.73 million units.

A survey of builder sentiment done by the National Association of Home Builders and Wells Fargo showed sentiment inched up one point to a reading of 76 in September. Lower lumber prices and strong demand for housing helped to offset problems builders are having with supply chain issues and ongoing labor shortages.