Housing starts in the United States increased more than forecast in August, a signal the industry is stabilizing, Bloomberg reports.

Builders broke ground at an annual rate of 598,000 homes, up 10.5 percent and the most since April, following a 541,000 pace in July, the Commerce Department said today in Washington, D.C. Economists had forecast August starts at a 550,000 pace, according to the median estimate in a Bloomberg News survey. Building permits, a proxy of future activity, rose from a record low.

Mortgage rates that are close to record lows may be giving builders some confidence to begin new projects after the expiration of a government tax credit caused sales to plunge. Even so, a housing recovery is dependent on a drop in the unemployment rate, which is currently near 10 percent.

“The housing market has found a bottom, and we’re bouncing along here,” Thomas Simons, an economist at Jefferies Group Inc. in New York, told Bloomberg. “The market is challenged by supply and until that is cleared out, it will be tough for the homebuilders. We also need additional job creation.”

Nonresidential construction, however, continues to struggle, according to an Associated Builders and Contractors (ABC) news release.

The ABC’s Construction Backlog Indicator (CBI) has slipped 16.3 percent during the last year. CBI is a forward-looking indicator that measures the amount of construction work under contract to be completed in the future. The measure currently stands at 5 1/2 months, the lowest in the 15 months ABC has gathered data.

“The fact that the CBI is now at its lowest point since ABC began measuring the statistic in November 2008 indicates that the nation’s nonresidential construction industry remains mired in its own recession,” said ABC chief economist Anirban Basu in the release.

Basu said nonresidential construction tends to lag behind the rest of the economy by 12 to 24 months.

“The hope had been that some signs of backlog stability would be apparent by now,” he said. “However, all indications continue to point toward an ongoing decline in the commercial and industrial construction industry.”