Housing data has been a mixed bag this year, but it's beginning to look as if the sector really is see-sawing its way back to vitality. Although housing starts declined a bit from April to May, building permits filed last month were up nearly 8% from April -- and a healthy 25% year over year. Builders' confidence surged, too, and the National Association of Home Builders came out with a prediction that single-family homes will enjoy a 19% boost over last year's lackluster performance.
Companies that supply the industry are on the upswing
Building-materials suppliers such as USG
Meanwhile, big-box retailers cater to the home-improvement crowd
Your friendly neighborhood Home Depot
The housing market still has headwinds to battle, such as a stuck-in-gear economy and a dull employment picture. Add to that the fact that the percentage of sales that have closed are lower now than they were a year ago, thanks to the difficulty many borrowers face obtaining mortgages these days. The good news can't be denied, though, and the overall trend is upward, albeit at a snail's pace.
Home Depot's and Lowe's gains over the past year may indeed be due more to the home-renovation market rather than to new construction -- so keep an eye on these two, since they stand to move even higher once the housing market really heats up. Lowe's could be due for a real turnaround, as it takes steps to undo the mistakes it made right before the housing downturn by closing non-productive stores.
Standard Pacific, with its huge P/E ratio, seems to have earned the faith of investors over the past year that it will soon move into profitable territory with its new business plan and rising year-over-year revenues. With only one stellar year under its belt, though, the company's stock price seems a bit expensive right now, even with the promise of additional revenue from the increase in new orders and backlog. This company could be one of the true sleepers of the housing recovery, however, so keep it in your sights.
Housing is a bellwether for a healthy economy, and it's a market segment created right here in the good old U.S. of A. See why our economic analysts are saying The Future Is Made in America by grabbing our free special report, "3 Stocks to Own For the New Industrial Revolution.
Fool contributor Amanda Alix owns no shares in the companies mentioned above. Motley Fool newsletter services have recommended buying shares of Home Depot, writing covered calls on Lowe's , and writing naked calls on Standard Pacific. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.