Cash for Caulkers: A Home Run for the Home-Improvement Sector? (Fool TV)

In spite of a swooning market, the home-improvement sector hammered out some great news last week, as both Home Depot (NYSE: HD  ) and Lowe's  (NYSE: LOW  ) announced positive earnings and raised their outlooks for the remainder of 2010. Both companies enjoyed top-line growth and improvement in same-store sales, as traffic increased and customers loosened their purse strings for the kind of big-ticket items that they'd recently been satisfied just to repair.

Might this be a bellwether for the overall economy? Motley Fool Inside Value analyst Jason Moser won't go that far, but he says investors should pay attention to a bill moving through Congress. The Home Star Energy Retrofit Act, better known as "Cash for Caulkers," is a $5.7 billion federal program that offers individual homeowners tax incentives for energy-efficient home renovations over the next two years.

Assuming it becomes law -- the House has approved it, and the Senate has yet to act -- "Cash for Caulkers" is bound to give the home-improvement sector a boost, at least temporarily. And that should mean more good news for investors in Lowe's and Home Depot. But watch that expiration date! One week after the similarly styled tax credit for new-home purchases came to an end, mortgage applications in the U.S. fell by 9.5% -- even as mortgage interest rates dropped below 5%.

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