Steady job gains this year and ultra-low mortgage rates have boosted sales of both newly built and previously occupied homes. More people are looking to buy or rent a home after living with relatives or friends during and immediately after the Great Recession.
Another big reason for the rebound is the excess supply of homes that were built during the housing boom has finally thinned out. Only 149,000 new homes were for sale at the end of last month, according to the report. That's just above a record low of 143,000 in August.
Still, the market is steadily improving and that has lifted builder confidence to its highest level in 6 ½ years, according to the National Association of Home Builders/Wells Fargo survey released last week. The pace of home construction is nearly 22 percent higher than a year earlier, according to government data. Builders are on track this year to start work on the most homes in four years.
Home prices are also increasing. The Standard & Poor's/Case-Shiller national home price index released Wednesday increased 4.3 percent in October compared with a year ago. That's the largest year-over-year increase in two and a half years. And prices rose for the 12-month period in 18 of the 20 cities tracked by the index.
Sales of previously occupied homes rose to the highest level in three years in November, the National Association of Realtors said last week.
Though new homes represent only a small portion of the housing market, they have a disproportionate impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the National Association of Home Builders.