Make no mistake about it, the housing recovery is under way. But that doesn't mean it's going to be a smooth ride.

The Commerce Department announced this morning that privately owned housing starts fell last month by 9.9% compared to May. The brunt of the damage was felt in the multifamily sector, which experienced a 26.7% sequential decline. Single-family housing starts fell by a comparatively modest 0.8%.

"As construction ramps up, we're bound to have some hiccups along the way," a market strategist told Bloomberg News. "I don't think this one data point is immediately concerning. The housing markets are going to be a driver of economic growth."

There were nevertheless two positive takeaways from the most recent round of data. First, permits for single-family construction projects increased in June by 4,000 to a seasonally adjusted annual rate of 624,000. This is a leading indicator of housing starts, as permits are a necessary predicate to the actual construction project.

And second, as you can see in the chart below, June marked the 21st consecutive month of year-over-year improvements in single-family housing starts, growing at a seasonally adjusted annual rate of 61,000 over the same month last year. While the 591,000 starts in June remain roughly half of where they would be in an otherwise healthy economy, things are nevertheless headed in the right direction.

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The latter developments have been confirmed by the earnings reports of the nation's largest private homebuilders. As I noted yesterday, Toll Brothers (NYSE:TOL), the nation's largest luxury homebuilder, said that its unit deliveries in the second quarter were up by 33%, while Lennar (NYSE:LEN), the third largest builder by units, reported a 39% improvement.

And the same is true at the nation's two largest homebuilders by units delivered. D.R Horton's (NYSE:DHI) deliveries shot up by 33% in the most recent quarter over the same three-month period last year, and PulteGroup's (NYSE:PHM) were up by 23%.

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