Lots of signs point to a recovery in the construction industry.

With help from a federal tax break, both Lennar Corp. and KB Home posted fourth-quarter profits - the first time since 2007 that either has been in the black.

KB Home CEO Jeffrey Mezger said in a statement: There are indications that housing market conditions may be stabilizing in some regions, reflecting, among other things, relatively high levels of affordability.

Other signs that things are getting better:

  • Residential investment increased 18.9 percent in the third quarter on a seasonally adjusted basis compared with the second quarter, according to the U.S. Commerce Department's Bureau of Economic Analysis. It was the first increase in residential investment since the fourth quarter of 2005, the government said.
  • Both KB Home and Lennar are buying land.
  • As sales increase, both have reduced incentives they have been offering buyers.
  • Mezger says KB is increasing prices.