September was the best month for home construction in nearly half a decade, bolstering the belief that the housing market is in the midst of the kind of sustained recovery that could help lift the broader economy.

Housing starts nationwide rose 15 percent last month to a seasonally adjusted annual rate of 872,000. That includes an 11 percent increase in single-family construction and a 25 percent jump in apartment construction, the U.S. Commerce Department reported Wednesday.

"If there was any doubt that the housing market was undergoing a recovery, even a modest one in the face of the terrible 2008 decline, those doubts should be erased by now," said Dan Greenhaus, chief global strategist at BTIG in New York.

The Commerce Department said applications for building permits -- an indication of future construction activity -- rose nearly 12 percent to an annual rate of 894,000, the highest level since July 2008. Permits in the Twin Cities also posted an unexpected double-digit increase last month.

Earlier this month, the Builders Association of the Twin Cities said that permit activity in the 13-county metro area had nearly doubled compared with last year.

"This is a good report," said Patrick Newport, U.S. economist at IHS Global Insight. "It is telling us that the housing market is improving and there is no reason to think that this will not continue going forward."

The recovery is being led by record-low mortgage interest rates and deep demand for new rental apartments, especially in major metropolitan areas, where developers are racing to satisfy pent-up demand for upscale rental housing with the kinds of amenities that just aren't available in buildings constructed during the last rental housing boom nearly two decades ago.

In Minneapolis, construction volume during September was $150.7 million, three times higher than last year. Last month alone, Minneapolis issued permits to build four new apartment buildings with 743 units. Already thousands of apartments are under construction.

Though the Commerce Department report should come as good news for the subcontractors, suppliers and other businesses that benefit when houses and apartments are built, the industry is still making its way back from the worst downturn since the Great Depression.

Housing starts are now 82.5 percent above the recession low rate of 478,000 hit in April 2009 but are still short of the 1.5 million that economists consider healthy. At the peak of the housing boom in 2007, housing starts exceeded 2 million.

Economists at Wells Fargo Securities said that because requests for permits are slightly lower than construction starts, there's a good chance that building could level off during the coming months when construction typically slows. Still, the group expects a 25 percent increase in single-family starts by the end of the year and recent trends, though volatile, represent a "true bottom."

That notion is gaining traction from recent gains in permits to build single-family houses, which increased 6.7 percent last month to a 545,000-unit pace, the highest level since the summer of 2008.

That trend is already evident in the Twin Cities, where construction of single-family houses is beginning to outpace apartment construction. During the first nine months of the year, multifamily housing represented nearly half of all new units planned for the metro area but fell to just 44 percent in September, according to the Builders Association of the Twin Cities.

Jonathan Smoke, executive director of research at Hanley Wood Market Intelligence, said builders are selling more single-family houses in large part because buyers aren't finding what they want in the existing inventories of new and existing houses. And those shortages have helped stabilize -- or lift -- home prices in some areas.

"That further supports confidence in the view that this is the beginning of a real recovery," he said.

Smoke said that a recent Hanley Wood survey of active home shoppers this summer found their top three reasons for being in the market was because of the bargain prices, low interest rates and consumers' tiring of their current residence.

Those factors are lifting the spirits of home builders, too. A recent survey by the National Association of Home Builders showed that builder confidence is now at a six-year high.

"Confidence is growing -- it is not slowing down -- as traffic continues to improve," Smoke said. "Builders are out of inventory so they are starting more homes."

The Associated Press contributed to this report. Jim Buchta • 612-673-7376