U.S. builders began construction on new homes at a faster pace in July, partly reversing a sharp decline the previous month, the government said Friday in a report suggesting that housing construction is maintaining its recovery. The Commerce Department said housing starts rose 6 percent to an annual rate of 896,000 last month. While an improvement from June, it was below recent peak of more than 1 million in March. Construction began on 26 percent more apartments—a volatile category—but 2.2 percent fewer single-family houses, which comprise the bulk of housing units in the report. Building permits, a gauge of future construction activity, also rose, though mostly because of apartments. Permits rose 2.7 percent to a rate of 943,000, boosted by a 13.5 percent surge in apartment permits. Permit applications for single-family homes fell 2 percent. In June, builders had sought the most building permits for single-family homes in five years. Americans are buying more new homes, and builders are increasingly optimistic that demand will continue to rise. Both trends should spark more construction. Sales of new homes jumped in June to their highest level in five years.