The housing market finally may be finding its footing. 

According to data released Wednesday by the U.S. Census, overall housing starts rose in January with a seasonally adjusted level of 591,000. Compared to the previous month, that represents a 2.8% in activity; annually, it translates into 21.1% increase over last year’s record-low levels of construction.

Single-family starts increased to seasonally adjusted pace of 484,000, which is 1.5% above December’s numbers and 35.6% jump over January 2009.

Permits, which are a crucial indicator of future construction activity, slipped 4.9% on an overall basis to a seasonally adjusted rate of 621,000. Compared to January 2009, this is a 16.9% jump from those admittedly weak levels during the depth of the downturn.

Single-family permits stayed nearly flat in January for single-family building, inching up just 0.4% on a monthly basis to a seasonally adjusted level of 507,000.

“The small increase may indicate that builders were stocking up on permits to meet an anticipated surge in demand from the second homeowner's tax credit,” said Patrick Newport, U.S. economist for IHS Global Insight, who did note that “this surge has yet to materialize.”

Still, that single-family permit pace stands 48.2% above the same month one year ago.

Overall, the relatively small movement in the monthly numbers for both starts and permits seemed to give analysts comfort about the year head. “With the decline in activity following the original expiration of the housing tax credit firmly behind us, we believe this data continues to support our view that housing demand continues to stabilize if not slowly reemerge,” said Michael Rehaut, a housing analyst with J.P. Morgan.

Alison Rice is senior editor, online, at BUILDER magazine.