Construction of homes and apartments rose 10.5 percent in August from a month earlier to a seasonally adjusted annual rate of 598,000, the Commerce Department said Tuesday. That's the highest level since April. Pulling the figures up was a 32 percent monthly increase in the condominium and apartment market, a small portion of the market. Single-family homes, which represented about 73 percent of the market in August, grew a little more than 4 percent.

Housing starts are up 25 percent from their bottom in April 2009, but they remain 74 percent below their peak in January 2006. Single-family housing starts are up 11 percent from their low point in January 2009, but down 78 percent from their peak in January 2006.

Even with the modest rise in construction last month, the pace of building would need to at least double to signal a healthy market and contribute in a meaningful way to job growth, according to most economists. They don't see that happening until the middle of the decade.

Builders are competing with millions of foreclosures and other distressed properties that show no signs of abating. They are unlikely to ramp up construction until those are cleared away and demand for new homes picks up.

"Home building activity remains at an astoundingly weak level," said Paul Dales, U.S. economist with Capital Economics.

Most economists agree that construction has to be at least double current levels for the market to be considered healthy - between 1.2 million and 1.5 million each year. Dales doesn't see that happening for at least three years.

The industry is suffering the repercussions of a massive building boom that saw 2 million homes per year constructed from 2004 through 2006. Many of those homes were sold to speculators. They then resold the homes, often to borrowers who took out risky loans and then defaulted.

Those unsustainable boom times aren't coming back, economists say.

"We're not going to get back to that kind of unsupportable level of demand," said Brad Hunter, chief economist with Metrostudy, a real estate research and consulting firm. He doesn't expect the industry to hit the 1 million per year rate until 2012, and that's only if the economy does not slide back into a recession.

Normally, the building industry powers economic recoveries. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

Construction activity rose 34 percent in the West in August and was up 22 percent in the Midwest and 7 percent in the South. Construction fell, however, by 24 percent in the Northeast.