Berkshire Hathaway's $1 billion homebuilding investment indicates Warren Buffett's confidence in a future U.S. housing market rebound.

Nucor is one of the largest and most diversified North American steelmakers. It uses electric arc mini-mills, which are more flexible than older blast furnaces. Nucor can, basically, ramp up and down with steel demand, allowing it to have stronger margins through the entire steel cycle. The steel cycle is important here.

Berkshire Hathaway revealed four new investments last Thursday in steelmaker Nucor, insurer UnitedHealth and two of the nation's biggest homebuilders — Lennar and DR Horton.