The U.S. Commerce Department released the housing market data on Tuesday. Housing starts in the U.S. rose 0.2% to 1.206 million annualized rate in July from a 1,204 million pace in June, beating expectations for a decline to 1.190 million. It was the highest level since October 2007.

June's figure was revised up from 1.174 million units.

The increase was driven by an increase in starts of single-family homes.

Housing market benefits from the strengthening of the labour market.

Building permits in the U.S. dropped 16.3% to 1.119 million annualized rate in July from a 1.337 million pace in June. June's figure was revised down from 1.343 million.

Analysts had expected building permits to decline to 1.232 million units.

Starts of single-family homes rose 12.8% in July. Building permits for single-family homes were down 1.9%.

Starts of multifamily buildings dropped 17.0% in July. Permits for multi-family housing slid 31.8%.