$3.8 million Corvette boosts muscle car market

For years, the car collecting market has been a tale of two recoveries. Ferraris and other vintage European sports cars were soaring in price and demand. But American muscle cars—which saw irrational run-ups in the mid-2000s—were stalled.

Now, the muscle car market is back. The collectible car auctions in Scottsdale, Ariz., which ended Sunday, totaled $248.6 million, up from $225 million last year, according to Hagerty, a collectible car insurance company.

"I would say that we now have a full recovery in the muscle car segment," said Hagerty CEO McKeel Hagerty. "But I think it's a more rational market this time around."

1967 Chevrolet Corvette L88 Coupe

Source: Barrett-Jackson

Of course, Ferraris still rule the price charts. Five of the top 10 sellers by price were Ferraris. The top two sellers by price were a 1958 Ferrari 250 GT California LWB Spyder, which sold for $8.8 million from RM Auctions, followed by a 1958 Ferrari 250 GT Cabriolet, which was sold by Gooding for $6.16 million.

(Read more: This rusted out Ferrari could fetch $2 million)

But coming in fourth place was an American favorite, a Corvette. A 1967 Chevrolet Corvette L88 Coupe was sold by Barrett-Jackson for $3.85 million, the most ever paid for a Corvette.

A second Corvette, a 1969 Rebel Convertible Race Car, also from Barrett-Jackson, sold for $2.86 million.

Hagerty said the L88 was like the "mythical fish" in the car world—very rare, highly prized and of outstanding quality. Corvette only made about 20 of the L88s, and even the most selective car collectors recognize it as an exceptional machine.

(Read more: Super-luxury car sales fell in 2013. Blame China)

Some other big American sellers include a 1963 Shelby Cooper Monaco King Cobra, which sold for $1.65 million, and a 1954 Plymouth Belmont Concept Car, which went for $1.32 million.

Hagerty said that while the muscle car craze of 2005 and 2006 saw "crazy" prizes for middling cars with high-powered Hemi engines, the current market is being driven by higher-quality cars and more rare models.

The low end of the muscle car market, which includes cars priced around $50,000 to $100,000, is especially strong, he said. Prices for older Mustangs, Corvettes, Camaros, Dodge Challengers and other classics are up as much as 25 percent over last year, according to Hagerty.

(Read more: Coming soon: Uber-luxury Rolls Royce SUV?)

One of the drivers of the muscle car rebound is the return of buyers from the real estate and construction industry—contractors, developers and builders, he said.

"Those were very strong buyers during the real estate boom and they had exited the market," Hagerty said. "Now they're back and they're very good buyers."

—By CNBC's Robert Frank. Follow him on Twitter @robtfrank.

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