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NEW YORK (CNN/Money) - Despite soaring oil prices and rising short-term interest rates, corporate earnings have been coming in surprisingly strong over the past few months.

More than 90 percent of the S&P 500 have reported second-quarter results, and year-over-year earnings are up an average of 15 percent, according to Zacks Investment Research. That's several percentage points better than expected.

One of these positive surprises came from Lowe's Companies, the No. 2 retailer for do-it-yourselfers (after Home Depot). On Monday, the company reported that second-quarter net income jumped almost 20 percent on 17 percent revenue growth. Analysts were expecting a 17 percent earnings gain on a 16 percent revenue increase.

Several factors fueled the excellent results. Because of weather, homeowners in some areas carried spring projects over into the summer. And the steady economy has encouraged special orders and sales to business.

But the main drivers of Lowe's profit gains have been new store openings and the general boom in home prices.

Sales at stores open at least a full year rose 6.5 percent. That's good news, because it means that Lowe's is probably taking a bit of market share from Home Depot.

However, mid-single-digit increases in same-store sales are nowhere near sufficient to sustain Lowe's overall earnings gains. Moreover, Lowe's has said that growth in same-store sales could slow slightly in the third quarter.

As a result, the largest part of the retail chain's sales gains are coming from new stores. Lowe's is on track to open 150 new outlets this year, compared with 1,138 current stores. The company estimates that this rate will produce about 13 percent growth in square footage for the year.

This expansion is being supported by the robust real estate market. Whether moving to new places or upgrading their existing houses, homeowners see no reason to stint on improving their properties.

For this reason, Home Depot also reported strong results on Tuesday morning.

Lowe's (Research) shares have been performing well over the past three months, gaining more than 20 percent. The question is whether that trend will continue.

At $65.89 a share, the stock is trading at 20 times earnings for the current fiscal year ending Jan. 31, 2006, and at 17 times projected results for next year.

That's not cheap, but it's not unreasonable for a company with earnings projected to grow at a 17 percent to 18 percent compound annual rate over the next five years.

Lowe's should be able to maintain its rapid rate of new store openings. After all, Home Depot already has 1,955 outlets in North America.

So the real question for Lowe's is the state of the housing market. Interest rates will probably continue to rise over the next couple of years. But higher rates don't necessarily hurt home-improvement retailers.

What shareholders in this sector need to monitor is the state of the housing market itself. A significant drop in home prices could quickly cool off home-improvement sales. As long as home prices remain firm, however, the do-it-yourself retailers could well continue outpacing the broad market.

Sivy on Stocks resources:

Sivy 70: America's best stocks

Guide to Growth

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Michael Sivy is an editor-at-large for MONEY magazine. Click here to receive Sivy on Stocks via e-mail every Tuesday.