Some hurdles to a smooth recovery remain: Builders are struggling to compete with deeply discounted foreclosures and short sales. (Short sales occur when a lender accepts less than what's owed on a mortgage.)
And many would-be buyers are struggling to qualify for home loans or can't afford larger down payments that banks require.
Though new homes represent just 20 percent of the overall home 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 taxes, according to the National Association of Home Builders.
AP Economics Writer Martin Crutsinger contributed to this report.
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