The Commerce Department has announced that home builders broke ground in July at their fastest pace since 1986. The report showed that housing starts rose 1.5 percent in July to a seasonally adjusted 1.872 million annual rate. Starts of single-family homes, at a 1.521 million annual rate, were the highest since November 1978.

The report did include one cautionary sign. Permits for new homes -- an indicator of future building -- dipped 2.4 percent to 1.780 million annual pace.

Starts in the West were down 13.9 percent to a 434,000 annual rate. In the South starts rose to an 872,000 annual rate, a gain of 5.6 percent. The Midwest starts rose by 5.7 percent to a 372,000 pace.