Construction of 137,000 new homes began in England last year, an increase of 10% on the previous year, according to the Department of Communities and Local Government (DCLG).
The number of homes that were completed increased by 8% to 118,769.
Stewart Beaseley, executive chairman of the Home Builders Federation, said: "Today's figures demonstrate the increase in house building activity over the past 18 months."
He said there had been an improvement in consumer confidence and the Help to Buy scheme has increased demand for new homes, to which the industry has responded.
"We estimate that there are now over 100,000 more people employed as a result of the increase in house building, providing the country with an economic boost as well as much needed housing.
"However, we are still way short of building the number of new homes the country needs."
Campbell Robb, the chief executive of housing charity Shelter, echoed Beaseley's concerns.
"While a small increase in the number of homes built might be heralded as a success, the real story here is the shocking fact that we're building just half the homes we need in England," Robb told the BBC.