U.S. housing starts jumped 9.8 percent in June to a seasonally adjusted 1.174 million annual rate, the National Association of Home Builders said.

Citing figures from the U.S. Department of Housing and Urban Development and the Commerce Department, the association said multifamily production fueled the spike, with a 15.3 percent increase for the month.

"The multifamily gains this month are encouraging and show that the millennial generation continues to be drawn to the rental market," said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo.

Combing single- and multifamily housing, starts increased 35.5 percent in the Northeast and 13.5 percent in the South. Starts were down by 0.7 percent and 6 percent in the Midwest and West, respectively.

While builders are reporting overall confidence in the housing market, they continue to note difficulties accessing land and labor," said NAHB Chief Economist David Crowe. "These headwinds appear to be affecting production gains in the single-family sector."