U.S. builders started work on homes in December at the fastest pace since the summer of 2008 and finished 2012 as the best year for residential construction since the early stages of the housing crisis.
The Commerce Department said Thursday that builders broke ground on houses and apartments at a seasonally adjusted annual rate of 954,000. That's 12.1 percent higher than November's annual rate and nearly double the recession low reached in April 2009.
Steady growth in home construction is the latest sign of a housing recovery that is gaining strength.
For the year, builders started work on 780,000 homes. That's still only half of what is consistent in healthier markets. But it is an increase of 28.1 percent from the 608,800 homes started in 2011. And it is the most since 2008 - shortly after the housing market collapsed in late 2006 and 2007.
In December, the pace of single-family home construction, which makes up two-thirds of the market, increased roughly 8 percent. Apartment construction, which is more volatile, surged 23 percent.
Applications for building permits, a sign of future construction, inched up to a 4 ½ year high.
Steady job gains, record-low mortgage rates and a tight supply of new and previously occupied homes available for sale have the housing market recover.
Confidence among homebuilders held steady in January at the highest level in nearly seven years. But builders are feeling slightly less optimistic about their prospects for sales over the next six months, according to a survey released Wednesday.
The survey came at a time of improving fortunes for homebuilders, many of which have seen sales improve over the past year amid the best market for newly built homes since the housing boom in the middle of the last decade.
In November, sales of previously occupied homes rose to their highest level in three years, while new-home sales reached a 2 1/2-year high.
Those factors have helped make homebuilders more confident and spurred new home construction. But homebuilders' are still warily watching the current standoff in Washington between President Barack Obama and Congress over several approaching budget deadlines, including the need to boost the nation's $16.4 trillion borrowing limit.
Though new homes represent less than 20 percent of the housing sales market, they have an outsize 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 data from the homebuilders association.