Be Nimble, Quick to Outmaneuver Recession

CHICAGO (TheStreet) -- Homebuilding companies have never been glamour stocks. Lennar(LEN Quote) and Pulte Homes(PHM Quote) are never going to get the same fawning attention as Apple(AAPL Quote) or Amazon(AMZN Quote).

But in the past few days, companies that specialize in new-home construction have gathered more interest than usual, becoming the crystal balls through which economy-watchers look for promising signs to come. If growing numbers of Americans put down deposits for a new house, goes the thinking, the worst of the recession may be over.

Most of the homebuilder earnings reports released recently have been cautiously optimistic. Yes, all the major companies are still losing money. Compared to the boom years of 2006 and 2007, far fewer people are touring model homes and signing contracts. But, overall, the losses aren't quite as bad as they were six or nine months ago, and potential buyers seem more eager to make a deal.

But does this mean the battered construction sector as a whole is headed for a rebound? Not likely. The many small businesses tied to the construction industry should brace themselves. The lean times will probably continue well into next year.

"Construction has by far the highest unemployment rate of any industry," says Ken Simonson, chief economist for the Associated General Contractors of America. While overall U.S. unemployment is about 9.7%, the rate among construction workers is 16.5%.

The news has been especially bad for workers who specialize in nonresidential construction. Office towers and luxury hotels that were approved two or three years ago were still being completed throughout 2008. But now those major projects are drying up. In the past few months, nonresidential construction workers have been losing their jobs at a faster rate than those who work residential jobs. "I think the worst is yet to come," Simonson says.