Annual Rate of Housing Starts in 2011's Second Half: 640,000

Even if the U.S. housing market is still a shadow of what it was a few years ago, a slew of statistics suggests that it has improved a bit recently. The annual rate of residential groundbreakings approached 640,000 in the second half of 2011, the highest six-month average since early 2009, though well below the record 2.1 million in 2005. Building permits for new homes and existing home sales have also risen recently. Although the numbers are still a fraction of boom-time levels, the increases may explain why the National Association of Home Builders Market Index, which measures homebuilder confidence, reached its highest level since 2007.

Since the collapse of the housing bubble in 2007, a massive inventory of unsold homes, as well as the threat of millions of foreclosed properties coming onto the market, have kept house prices and new home construction depressed. The housing market will recover at some point, though -- hard as that may be to envision. After all, the Census Bureau projects the U.S. population to increase from 308 million today to 439 million in 2050, and all those people need places to live. While the chances of another prolonged housing boom are slim, the spate of positive statistics may indicate the housing market is turning a corner.

Higher home values would boost consumer confidence, while stronger housing demand would bode well for some of the more than 2 million construction workers who lost jobs after the housing bust. Such a recovery could be a boon for the stock market, and homebuilders in particular. The fortunes of these companies, whose stocks have underperformed the S&P 500 by 50 percentage points since the start of 2007 (chart), will depend largely on whether the "green shoots" in the housing market prove to be the start of a sustained recovery. Douglas Yearley Jr., chief executive officer of homebuilder Toll Brothers, recently told Bloomberg Television he's bullish: "We see more people coming out to buy. Affordability has never been better."