New-home construction for single-family homes saw an improvement in July, despite builders’ concerns about affordability headwinds. Single-family housing starts rose 1.3% to 876,000 units last month, the Commerce Department reported. The largest regional increases in single-family homebuilding last month occurred in the South.

But a decline last month in multifamily production for condos and apartments led to an overall decrease in total housing starts by 4% in July. That marked the third consecutive month for overall decreases on the Commerce Department’s index. Still, “builders remain confident about the market, and this is reflected in recent modest gains in single-family starts,” says Greg Ugalde, chairman of the National Association of Home Builders.

Lower mortgage rates have been a hopeful sign for homebuilders and buyers in recent weeks. Builders have skewed toward constructing in the upper price brackets in recent years due to rising costs for labor and lots. “Permits bottomed out in April, and single-family starts hit their low point in May—and now we are starting to see the gradual improvement in the market that we’ve been forecasting,” says NAHB Chief Economist Robert Dietz.

The NAHB reported last week that its builder confidence survey of new single-family homes rose in August and that demand for homes at lower price points remains strong. Indeed, housing permits, a gauge of future production, rose 8.4% to 1.34 million units in July. Single-family permits rose 1.8%, and multifamily permits surged 21.8%. Permits saw the biggest increases in the Northeast, rising 2.4%, while falling by 7.1% in the Midwest, 0.1% in the South, and 6.8% in the West.

Builders appear to be shifting their focus to less expensive homes. “While this change was a clear and long-needed response to homebuyer demand and tastes amid an affordability crisis and a softening market, it also means that builders are now focused on homes that are less profitable for them,” says Daryl Fairweather, Redfin’s chief economist. “As builders continue to adjust to a less favorable market, along with rising tariffs for building materials and a labor shortage, I expect to see new-home inventory stay low overall. But low mortgage rates and more affordable new homes mean sales could strengthen a bit in the coming months.”

Sales of new homes so far this year have only inched up 0.8% in the second quarter year over year. Meanwhile, new-home supply has decreased by 1%, which is one of the largest annual declines since the first quarter of 2013, according to data from Redfin.

The small price decline in the new-home market, along with a 0.7% annual decrease in new listings and a 3.4% drop in building permits, has made the new-home market softer in the second quarter, according to Redfin researchers.

Still, builders are hopeful. Builder confidence within the single-family new-home market rose slightly in August, according to the National Association of Home Builders/Wells Fargo Housing Market Index, released Thursday. Lower mortgage rates may help lure more buyers, but economic uncertainty may also limit growth too, says Robert Dietz, the NAHB’s chief economist. Still, “demand is good and growing at lower price points and for smaller homes,” he notes.

While demand is increasing for single-family homes, builders continue to struggle with rising construction costs from “excessive regulations, a chronic shortage of workers, and a lack of buildable lots,” says Greg Ugalde, the NAHB’s chairman.

Mortgage rates are hovering near three-year lows, and more homeowners may want to start taking advantage. Up to 20 million homeowners could “theoretically” see a 75-point drop in mortgage rates by refinancing, according to a recent analysis from Black Knight.

For homeowners with a credit score of at least 720 and with 20% of equity in their property, they could see savings of nearly $270 per month from lower rates.

“Millions of homeowners could save money by refinancing,” Holden Lewis, home expert for NerdWallet, told Forbes.com. “That includes most people who bought homes in 2018. Seriously, even if you bought your home last year, you could save money by refinancing right now.”

Homeowners are starting to respond to lower rates. Refinances are at the highest point since mid-2016 and have doubled since late July. Refinances are up 37% over the past week alone, according to the Mortgage Bankers Association.

The 30-year fixed-rate mortgage averaged 3.6% last week, according to Freddie Mac.

Mortgage debt in Louisiana has been rising faster than any other state over the past year, according to the study. The state posted a 4% increase in mortgage debt in the first quarter of this year. Texas, Utah, and Colorado followed, at 3.6% and both 3.2%, respectively.

California had the highest number of metros—at eight—in the top 10 metros for highest mortgage debt in the country. San Jose-Sunnyvale-Santa-Clara, Calif., had the highest average mortgage debt nationwide at $519,576, followed by San Francisco-Oakland-Fremont, Calif.; Santa Barbara-Santa Maria-Goleta, Calif.; Los Angeles-Long Beach-Santa Ana, Calif.; and Santa Cruz-Watsonville, Calif.

Meanwhile, homeowners in Danville, Ill., owed the least on their homes, with an average $70,964 in mortgage debt in the first quarter of this year. Rounding out the top five for metros with the lowest mortgage debt were: Johnstown, Pa. ($71,269); Weirton-Steubenville, W.Va.-Ohio ($75,878); Terre Haute, Ind. ($79,281); and Youngstown-Warren-Boardman, Ohio-Pa. ($84,664).

Real estate has surpassed stocks as Americans’ favorite long-term investment, according to a nationwide Bankrate survey of about 1,000 respondents. Thirty-one percent of survey respondents named real estate as their favorite investment for building wealth that they don’t need access to for a decade or more. That is the best that real estate has performed on Bankrate’s annual survey in the last seven years. In 2018, stocks were the most popular investment.

Millennials, at 36%, were the most likely age group to call real estate their top long-term investment choice, according to the survey. Other generations also favored real estate, including generation X (31%), baby boomers (30%), and the silent generation (23%). “Millennials are higher on real estate than any other age group, have cooled a bit on cash, and still aren’t keen on the stock market when investing for more than ten years,” says Greg McBride, Bankrate’s chief financial analyst.