WASHINGTON, Feb. 17 -- Nationwide housing production hit its strongest pace in the last six months this January, posting a 2.8 percent gain to a seasonally adjusted annual rate of 591,000 units, according to figures released today by the U.S. Commerce Department.

"Builders are starting to see the positive impacts of home buyer tax credits and other favorable buying conditions in terms of consumer demand, and are cautiously increasing production to meet that demand," said National Association of Home Builders Chairman Bob Jones, a home builder from Bloomfield Hills, Mich.

"As our latest home builder surveys have indicated, today's excellent home buying conditions - including the availability of tax credits for first-time and repeat buyers, very favorable mortgage rates and stabilizing home values - are helping drive potential buyers back to the market," said NAHB Chief Economist David Crowe. However, he said, "A continuing shortfall in available credit for building projects is still producing a drag on new construction and slowing the progress of recovery in housing and the overall economy."

The overall gain in housing starts was reflected on both the single- and multi-family side this January. While single-family starts posted a 1.5 percent gain to a seasonally adjusted, annual rate of 484,000 units, multifamily starts posted a 9.2 percent gain to 107,000 units.

Meanwhile, overall permit issuance, which can be an indicator of future building activity, fell 4.9 percent to a rate of 621,000 units in January. This was due entirely to a 23 percent decline to 114,000 units on the multifamily side, which offset a big gain in that sector the previous month. Single-family permits held virtually even, with a 0.4 percent gain to 507,000 units.