WASHINGTON (AP) — Construction of new U.S. homes surged 22.6% last month as homebuilders bounced back from a lull induced by the coronavirus pandemic.

The Commerce Department reported Tuesday that new homes were started an annual pace of nearly 1.5 million in July, highest since February and well above what economists were expecting. Housing starts have now risen three straight months after plunging in March and April as the virus outbreak paralyzed the American economy. Last month’s pace of construction was 23.4% above July 2019’s.

“U.S. housing starts blew the roof off of expectations in July … …. these are the kind of gains seen after storms/hurricanes,” Jennifer Lee, senior economist at BMO Capital Markets, wrote in a research note. Strong demand and limited supply drove builders to break ground.

The big gains came from the construction of apartments and condominiums, which soared 56.7%. But single-family home construction ticked up, too, by 8.2%.

Construction rose all over — 35.3% in the Northeast, 33.2% in the South, 5.8% in both the Midwest and the West.

Applications for building permits, a good indication of future activity, jumped 18.8% from June to an annual rate of 1.5 million, highest since January and up 9.4% from July 2019.

The National Association of Home Builders reported Monday that builders’ confidence this month matched the record high first reached in December 1998. “Strong demand and a record level of homebuilder confidence will support housing starts in the second half of 2020,” economists Nancy Vanden Houten and Gregory Daco of Oxford Economics wrote.

But they warned that Congress’ failure to approve another rescue package could take a toll on the economy. “The still-widespread coronavirus and an economy struggling to recover without fiscal support may limit the upside” for the housing industry, they wrote.

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