Watch this video from This Old House to learn how to patch stucco.
1 Scrape loose, blistered stucco from the wall with a 4-inch drywall knife.
2 Clean away loose grit and dust from the wall with a wire brush.
3 Create stucco by mixing three parts sand, one part Portland cement and ¼ part lime in trough or wheelbarrow.
4 Add water and mix with shovel until stucco is the consistency of peanut butter.
5 Mix in some mortar dye to tint the stucco to the desired color.
6 Lightly mist the wall with a garden hose; keep wall damp while applying the stucco.
7 Place some stucco on the hawk, then spread it onto the wall with a trowel.
8 Patch in all exposed wall areas with stucco.
9 Use a wet rubber float to smooth and blend the new stucco with the surrounding surfaces.
10 Press the rubber float into the stucco, then pull straight out to create a stippled texture.
11 Allow the stucco to thoroughly dry, then apply a coat of masonry primer and paint.