A series of reports released this month indicate that the housing market is picking up pace after a quiet first quarter. Data released last month showed that new home sales had declined for the third consecutive month in March. However, spring seems to have brought fresh cheer to the sector with demand expected to experience an uptick.

An increase in existing home sales in March has already lent its weight to such an argument. Picking stocks which will benefit from renewed vigor in homebuilding activity looks like a good option at this time.

Non-Residential Construction Spending Up

Construction spending increased 0.3% from February to a seasonally adjusted annual rate of $1,137.5 billion in March. This was lower than the consensus estimate of a 0.5% increase. However, an upward revision was made to February’s increase which shows that spending rose 1% instead of falling by 0.5%.

More importantly, March’s increase was fueled by a 1.5% uptick in residential construction spending. This gain negated a 0.4% fall in nonresidential spending. Over the last 12 months, construction spending has gained 8%. During this period, nonresidential construction increased by 8.3%.

Separately, the National Association of Home Builders (NAHB) reported that home builder sentiment index (HMI) remained flat at 58 in May, for the fourth consecutive month. This is another indication that the sector continues to experience steady growth, fueled by an improving job market and low mortgage rates.

Housing Starts Increase

Meanwhile, housing starts increased 6.6% from March to an annual rate of 1,172,000 in April. This was also higher than the consensus estimate of an increase to 1,123,000. Additionally, the metric was revised upward by 40,000 for the first quarter as a whole. Nearly two thirds of all housing starts are made up of single family homes, which increased by 3.3% in April.

Additionally, housing starts increased by 10.2% during the first four months of 2016, compared with the year-ago period. Significantly, single family housing starts increased 16.8% year over year during this period.