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A new home is under construction on Monday in the Briar Chapel community near Chapel Hill, N.C. Construction of new U.S. homes dipped slightly last month, missing expectations, in a sign that the building industry's recovery from the housing bust is likely to be bumpy and gradual.

Construction of new single-family homes nationally rose for the fifth-straight month in July as more buyers walked into model homes ready to sign contracts, the Commerce Department said Tuesday.

The pace of construction edged up almost 2 percent and building permits for future construction climbed nearly 6 percent. The confidence level in the industry this month is the highest in more than a year, the National Association of Home Builders said.

Although direct comparisons for Utah are not available, along the Wasastch Front, builders took out permits for the construction of 438 new homes in July, up slightly from 416 in July 2008. Builders locally attribute the better year to state-level incentives that were available earlier in 2009 and a federal incentive of $8,000 that will be offered through Dec. 1.

Although even a small increase is a good sign for the beleaguered housing industry locally, building levels are still only a fraction of what they were in the peak year of 2006. That July, for example, builders took out permits for the construction of nearly 1,400 homes.

Nationally and in Utah, as home builders hire more workers to pour foundations and pave roads, they are providing some long-needed juice to the economy. With new construction up 37 percent from the bottom this winter, the housing industry this quarter is expected to give a small boost to the nation's economic output for the first time in 3½ years.

"It's the

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general trend that matters, and with housing, the direction is up," wrote Joel Naroff, president of Naroff Economic Advisors.

Of course, it's not all good news. New-home construction is still off more than 70 percent from the peak in January 2006, and apartment construction fell 13 percent from June to July.

That pulled the combined figure for homes and apartments down 1 percent to a seasonally adjusted annual rate of 581,000 units, from an upwardly revised rate of 587,000 in June. Economists polled by Thomson Reuters expected a pace of 600,000 units.

And it's unclear that the trend will continue. July was the last month that builders can start new homes and have first-time buyers qualify for a federal tax credit.