The figures were the highest since July 2008, the National Association of Home Builders said.

"Builders are responding to the rising demand for new homes as consumers begin to feel more confident about their local markets and put back into motion purchasing plans that were on hold during the recession," said Barry Rutenberg, NAHB chairman and a home builder from Gainesville, Fla. "Yet, while September's surge in activity is certainly encouraging, we need to remember that we still have a long way to go back to a fully functioning market -- and in order to get there, significant challenges must still be addressed in terms of credit availability and appraisal issues, as well as the increasing cost of building homes due to rising materials prices and a declining inventory of buildable lots."

David Crowe, the association’s economist, said the figures prove the U.S. housing market’s recovery is for real.

"Today's strong report corresponds with the significant gains we've seen in builder confidence over the past year, and confirms our view that a housing recovery is solidly under way in a growing number of markets nationwide," Crowe said. "That said, we are now almost at the half-way mark in terms of what would be considered a normal amount of new-home construction in a healthy economy, and we need to see consistent improvement like this over an extended period to get back to where the market should be in terms of generating jobs and economic growth."