Single-family builders gave a big push to the economy in March, pulling a seasonally adjusted level of 543,000 permits, which is 5.6% above the previous month, according to data released Friday by the U.S. Census Bureau.

That level of permit activity is also the highest it’s been since August 2008, offering hope to industry watchers that the housing market is slowly but surely finding its footing.  “We believe this data continues to point to stabilization and slowly reemerging demand, as starts and permits have moved upward since [first quarter 2009] in a consistent but moderate fashion,” said Michael Rehaut, an analyst with J.P. Morgan.

Total housing permits jumped 7.5%, to a seasonally adjusted level of 685,000 units, which is the most activity since October 2008. On an annual basis, that figure stands 34.1% above March 2009. Compared to the same month, single-family permits are up a staggering 50.8% on a year-over-year basis, demonstrating just how low construction activity had fallen in early 2009.

Housing starts also increased in March, inching up 1.6% on a monthly basis to a seasonally adjusted 626,000 units. Annually, that represents a 20.2% gain.

Much of the starts gain came from the multifamily sector, which jumped 18.8% in March to reach a seasonally adjusted level of 95,000 units. (That includes both 2-4 unit structures as well as buildings with five or more units.) On an annual basis, though, multifamily starts are off 40.6%.

Single-family starts dipped 0.9% in March, but still remain 47.1% above the same month one year ago.

Some economists say it’s too soon to say that the new-home housing market has finally stabilized, given recent low numbers for new-home sales, rising mortgage rates, and the lackluster response to the extended housing tax credit.

“The housing starts/permits is almost always the most important monthly housing report, because a house started today affects [gross domestic product] and construction employment for the next 12 months,” explained Patrick Newport, U.S. economist for IHS Global Insight.

But that has changed as the “new home sales report has superseded the starts/permits report in importance,” he added. “This is because new homes sales have dropped to record lows—and the median time to sell a home has climbed to a record high--and if builders cannot sell homes, they will scale back on starts.”

Given these factors, Newport highlighted the upcoming new-home sales stat as one to watch. “The new home sales report for March, which comes out April 23, will tell us if these new homes are selling,” he said. “If we get another dreary report, builders will scale back, and single-family housing starts could remain flat for several more months.”

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