U.S. builders started construction on single-family homes and apartments in September at the fastest rate since July 2008, according to the Commerce Department.
Builders began work on 872,000 new homes - at a seasonally adjusted rate - in September. That's an increase of 15 percent from August.
Applications for building permits, a sign of future construction, jumped nearly 12 percent to an annual rate of 894,000, also the highest since July 2008.
Construction activity is now 82.5 percent higher than the recession low hit in April 2009, but still below a healthy 1.5 million rate.
New home building has an important ripple effect on the economy as new construction jobs are created. Once the home is built the economy gets another boost from furniture and appliance purchases.
This sector of the economy is still working its way up from a deep hole and the weak link for the economy remains jobs.
"Any doubts about the housing market coming back should be erased with the strong improvement in construction," economist Joel Naroff said in an email.
The Federal Reserve's actions to keep interest rates low makes this a great time to buy for people who have cash, a job and are able to get a loan if they need one.