This bounce back follows two quarters of falls and leaves starts only 3% below their level in the same quarter a year ago.
Despite the increase starts are still 43% below their last quarter of 2005 peak, but are now 58% above the trough in the March quarter of 2009.
Of the total 25,760 starts in the last quarter, housing associations recorded the first quarterly rise in more than a year, up 23%, while private home starts were also up 15%.
But the improvement has not yet worked through to completions, which dropped 7% to 27,060 in the third quarter and are now.44% below the 2007 first quarter peak.
Annual housing starts in the 12 months to September 2012, fell 9% compared with the year before and languished at 98,020.
Annual housing completions in England reached 117,190, an increase of 6% compared with the same period last year.
Official figures show there are particularly strong areas of new build starts along the M5 corridor from Devon up to Worcestershire and in areas north of the London green belt in Buckinghamshire, Bedfordshire and Cambridgeshire.
Higher levels of house building were also recorded along the A303 route from the edge of London through Hampshire into Wiltshire.
Sussex, Northamptonshire, Leicestershire parts of Lincolnshire and Derbyshire. also recorded higher than average activity.