The thin supply of homes for sale has helped drive this year's housing rebound. The market has finally started to shed the excess number of homes built during the housing boom.
At the same time, more people are looking to buy or rent a home after living with relatives or friends during and immediately after the Great Recession. And mortgage rates have been near record lows all year, making homes more affordable.
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.
Sales of previously occupied homes are near five-year highs, excluding temporary spikes in 2009 and 2010 when a homebuyer tax credit boosted purchases. Builders, meanwhile, are increasingly confident that the recovery has legs. A measure of their confidence rose to the highest level in six and a half years this month. And builders broke ground on new homes and apartments last month at the fastest pace in more than four years.
The Standard & Poor's/Case-Shiller home price index, released Tuesday, found that prices rose in most major cities in September compared to August. They rose 3.6 percent in the third quarter compared to the same period last year.
There are still factors dragging on a housing recovery. Many Americans, particularly first-time homebuyers, are unable to qualify for a mortgage or can't afford larger down payments.