“The strength seen in the housing-related component of the retail sales report does offer some encouraging on the tone of the housing market recovery,” said Millan Mulraine, deputy head, U.S. research and strategy, at TD Securities. “It reinforces the current narrative of a rebound in housing market recovery.”

“The combination of strength at building material stores and at furniture outlets definitely suggests that homeowners are spending money on their homes,” said Stephen Stanley, chief economist at Pierpont Securities.

The average size of homes built last year hit 2,600 square feet, an all-time high that surpassed even the housing bubble years, when homes averaged around 2,400 square feet, according to the Census Bureau.

Meanwhile, extremely large houses -- 4,000 square feet and up -- have been making up a much larger slice of the new homes built.

Last year, these mega homes accounted for more than 9% of new homes. In 2005, they represented 6.6% of homes built.

Houses that are a little smaller but still verging on mansion territory, those between 3,000 and 4,000 square feet, made up 21.7% of new homes in 2013, up from 15.6% in 2005.

"It is a big deal to buy a house. But if you do your homework and have the right documentation ready, this could be a great time to buy a home for many reasons," says Jay Plum, executive vice president of Huntington National Bank, in Cincinnati, Ohio.

Why are rates rising? Well, one huge factor is that the feds will start raising rates about six months after they stop buying mortgage bonds, which is projected to happen sometime in 2015, says Plum.

"[Rates] probably won't start shooting up quickly. But a quarter of a point on an interest rate can mean about $100 more each month on [a homeowner's] loan. For a lot of families, that can make a big difference," he says.