Editor's Note: This article is part of Inc.'s weekly report on business niches in partnership with financial information company Sageworks.

From builder confidence and residential sales to corporate housing revenues and profitability, the housing market is showing signs of positivity and substantial growth.

During the past three years, private companies in the residential building construction industry have grown sales significantly and expanded net profit margins, according to financial information company Sageworks.

During the 12-month period ending June 9, 2015, average sales growth for businesses in this industry increased to 17.5 percent from 16.7 percent in the previous twelve month period. These companies are also seeing profit margins at a five-year high, with an average net profit margin of 5.1 percent in the most recent period.

“This was an industry that was hugely derailed by--and central to--the recession,” says Sageworks analyst Kevin Abbas. “These companies had a lot of room for significant post-crash growth, which we have seen over the past five years.”

The most recent housing figures released by the Census Bureau also reflect this strong performance from home builders. In April, sales of new single-family houses were adjusted to a rate of 517,000, roughly 7 above the previous month’s number and 26 percent higher than last year’s April estimate, according to the US Census Bureau and the Department of Housing and Urban Development.

While the National Association of Home Builders indicated that builder confidence in May dipped two points, NAHB chairman Tom Woods explained that the current 54-point level still indicates a “very solid” Q2 for home builder sentiment. The index is based off of a monthly survey that gauges three different components: builder perceptions of current single-family home sales, traffic of prospective buyers, and sales expectations for the next six months.  

The strong residential construction performance is directly tied to the overall health of the economy. “With the unemployment rate at 5.5 percent and folks finding greater job stability, more people in the U.S. may be looking to experience the ‘American Dream’ of buying a house,” Abbas says.

Low interest rates may also be serving as an encouraging factor for potential home buyers. According to Freddie Mac, the 30-year fixed mortgage rate was 3.84 percent as of May, 2015. This is higher rate than the previous month, but as of May 2014, the 30-year fixed rate stood at 4.19 percent. Abbas says these low may be leading to potential home buyers in the housing market.

Despite the positive recent performance, 18 percent sales growth is unlikely to be sustainable in the long term for home builders, according to Abbas.

“The economy and housing market is cyclical,” he says. “Inevitably, we’d expect to see a slowdown in growth within the housing market. Hopefully, home builders will be able to maintain steady, if not explosive, growth for the foreseeable future.”

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