WASHINGTON (MarketWatch) -- Construction on new U.S. homes rose 7% in March to a seasonally adjusted annual rate of 1.04 million -- the highest level since June 2008 -- according to data released Tuesday by the U.S. Department of Commerce.

The data pointed to an ongoing rebound in activity -- starts in March were up 47% from the same period in the prior year, the largest year-over-year growth since 1992. Economists polled by MarketWatch had expected construction starts in March to rise to a rate of 933,000 from an original February estimate of 917,000. On Tuesday the government upwardly revised February's starts rate to 968,000. Despite construction gains, starts remain below a bubble peak of almost 2.3 million in 2006.

Starts for buildings with at least five units rose to a rate of 392,000 in March, the highest level since January 2006, up 27% from February.