Growth in US Residential construction slowed in July after a strong surge the previous month, Commerce Department data shows.

Residential construction starts rose 0.2 per cent to an annual rate of 1.206 million, the highest pace since October 2007, and in line with analyst expectations.

The June surge was revised upward to a 12.3 per cent increase month over month.

Compared with a year ago, July housing starts were up 10.1 per cent, as the housing market recovers from the severe 2008-2009 recession.

The July increase was entirely due to starts on single-family homes, the largest part of the market, which jumped 12.8 per cent.

Construction of multi-family units, which tends to be volatile, dropped 17 per cent.

Building permits, an indicator of future activity, tumbled 16.3 per cent in July to an annual rate of 1.119 million, below the consensus estimate of 1.257 million.

Permits were up 7.5 per cent from July 2014.