First instinct, and short answer is NO.

Slightly longer answer is ONLY if you have a local pro like an Architect (not a material supplier or installer who are biased to a product or particular solution) review your wall's vapor profile to determine if the new finish will not create a condensation problem in your wall profile.

You probably have heard of "EIFS": Exterior Insulating Finish System. Commonly known by a manufacturer name "Dryvit" but there are plenty of others. Fake stucco. It consists of a moisture barrier (water-proofing) behind a thick foam sheet (depths vary) covered with a variety of base and finish layers, with varying degrees of re-inforcement, textures and colors. The benefit is it is light and adds insulation value to your wall. But it MUST have a continuous moisture barrier behind it, as well as appropriate flashing to let infiltrated water escape, especially at openings like windows and doors.

It's possible to use a product that is similar to the final EIFS coat over an existing stucco finish. It's like a sprayed on paint/texture coat. But ONLY do this after a vapor profile analysis has confirmed it is ok to do. While some walls can benefit from it, others can be rotted out within a year. And in many cases THE SAME wall type on the SAME building can experience opposite effects depending on local climate and solar orientation.

Tearing it off is really the best option; it allows you to control the entire wall finish system's moisture and vapor profile. If your stucco is as cracked as you say it is, being in the NE, you probably have other issues lurking behind it that you don't even see. Tearing it all off and starting over let's you eliminate those unknowns, address any issues in there that may have been lurking, and then seal the whole thing with a new, well installed finish system.

Bottom line: if you are thinking about putting new siding over the old, it will probably cost MORE to do that than to install new siding over existing exposed wall framing with stucco removed.

Demolishing existing stucco plus the reduced siding cost for installing on bare studs may be the same cost as new siding on stucco. But with stucco removed, you have no unknowns left in under the stucco, and if you go with EIFS or shingles/clapboard with a layer of foam insulation board under it you add insulation value to your walls and the reduced energy costs that go along with that.

wow! thank you so much. This is the most info i have gotten to date. The removal of the existing stucco, would that be handled by a mason of most contractors? I had a dormer redone a few years ago and the hammering to get the stuff off actually cracked the plaster on inside! Is hammer and chisel the only way to remove stucco?

@Dee: You're welcome!

Hard to advise on the removal technique without seeing the actual install, but it will be a relatively violent process. Stucco is basically concrete painted all over your house. It can be cut into small sections and then pried off, especially if it was backed with plywood, but the process will still probably cause some internal cosmetic damage. Part of the bargain.

And all my advice above is also all contingent on actually seeing the install. I'm going by what you describe, but upon seeing it, I might have a different opinion. Please keep that in mind.

Your best bet is to find a local pro that can do this sort of analysis for you having seen the conditions. An Architect is trained to do this, but a good builder with experience can as well.

thanks so much for your help! i am looking for a builder who can take a look an offer a price to remove the old stucco and replace with shingles. Thanks!