Developers will create 116 new homes on an underused site.
Durham Villages Regeneration Company (DVRC) is pushing ahead with the project to build a mix of two, three and four bedroom homes in the Parkside area of Seaham after planning permission was approved by Durham County Council.
The Heathway development will see 105 homes for sale at market value, three at for sale at a 30% discount for qualifying buyers, and another eight homes for "affordable rent".
The DVRC - a joint venture between the council and Keepmoat Homes - is working with the County Durham Housing Group on the project.
The partnership has now been operating for 15 years, and has invested more than £150million to create over 1,300 homes – around a quarter of which are for shared ownership or affordable rent.
A profit-sharing agreement means millions has also gone into council coffers to help fund projects and services for people in County Durham.
The Heathway initiative represents an investment by DVRC of around £16million and it is hoped that all the legal transfers can be completed in time to allow a start on site in the autumn.
Councillor Carl Marshall, chairman of the DVRC, said: “This is the partnership’s first development in Seaham and it demonstrates our commitment to delivering a range of housing schemes with a focus on regenerating local communities.
"The 116 homes at Heathway extends the partnership between the County Council and Keepmoat and will provide further investment and jobs throughout the construction period.”
Ian Prescott, land and partnerships director at Keepmoat Homes, said: “We are delighted to see the provision of much needed family homes for local people come a step nearer and are particularly pleased that this scheme has been so well received by the community.
“In all our work, we endeavour to engage with local people and their council representatives to produce developments best suited to local needs.”
County Durham Housing Group chief executive Bill Fullen said: “These much needed new homes for Seaham have only been made possible thanks to this innovative project that has brought together skills from the public, private and not for profit sectors.
“We’re looking forward to construction starting. We know that the affordable homes will be in high demand and can’t wait to see the first families moving in.”