WASHINGTON (AP) — U.S. builders broke ground on more apartment buildings last month, pushing up overall home construction 1.9 percent.

The Commerce Department said Tuesday that housing starts rose in March to a seasonally adjusted annual rate of 1.32 million, driven by a big 16 percent gain in apartment buildings. Single-family home construction slipped 3.7 percent.

Home construction has grown steadily since the housing crash bottomed out in 2012 and has emerged as a potential source of long-term economic growth. The pace of homebuilding is still below its long-run average of about 1.5 million houses and apartments a year. And millennials are increasingly moving out on their own and seeking to buy homes.

"It is still a case of demand outpacing supply in the housing sector, which bodes well for construction," said Jennifer Lee, an economist at BMO Capital Markets.

The construction of single-family homes typically has more economic impact than apartment building, because it employs more people. Analysts were disappointed by the drop-off in that category.

Still, single-family home construction is up 5.2 percent compared with a year earlier. The overall construction of houses and apartments rose nearly 11 percent in March from a year earlier, the government said.

Builders are struggling with conflicting trends in the housing market. There is a severe shortage of existing homes, which has pushed up prices in cities around the country. The number of existing homes available for sale in February plunged 8.1 percent from a year ago. That's lifting demand for new homes.

At the same time, mortgage rates have risen steadily in the past year. The average 30-year fixed rate rose to 4.42 percent last week, up from an average as low as 3.78 percent in early September last year, according to mortgage buyer Freddie Mac.

Builders have also complained that a shortage of construction workers and the limited availability of land has hindered new building.

Homebuilders remain confident despite the cross-currents, though there are some hints of concern. A measure of builders' optimism, the National Association of Home Builders/Wells Fargo builder sentiment index fell one point in April to 69, the fourth consecutive month of decline. Any reading above 50 indicates more builders see sales conditions as good rather than poor.

On a regional basis, housing starts ticked up on the Northeast and surged in the Midwest. They fell slightly in the South and West.

Building permits, an indicator of future construction, also rose last month, increasing 2.5 percent to a seasonally adjusted annual rate of 1.35 million. Permits were also lifted by apartment buildings, which jumped nearly 23 percent. Single-family home permits fell 5.5 percent.