More Signs of a Housing Bottom

MORE EVIDENCE OF HOUSING BOTTOM - Some recent numbers regarding the housing market were released. New Home Sales and May S&P Case-Shiller saw home prices rise for the first time in three years (+0.5%). June Existing Home Sales were up 3.6% in June versus a rise of 1.3% in May; inventory of homes fell by 0.7% in June to 3.82 million units; inventory at now at 9.4 month of supply; national med home price down 15%

BOTTOMLINE - The bottom is in! There is no other way to say it, the national housing bottom is in! Your town or neighborhood may still see more downside because housing is a regional game. Think about housing in the same way as the stock market. The stock market has found and bottom and overall has rallied significantly since March, however not every stock is higher. Similarly, not every region in the US will see their housing market improve in the months ahead. Investors looking to play a rebound in housing have several options that range from homebuilders, mortgage companies, building material stocks, to REITs. The SPDR Homebuilder ETF (XHB) has rallied 15% in 2009 as the iShares REIT ETF (ICF) is down 14%. I would not touch either ETF at currently levels, but would be okay with revisiting them on a pullback. {We are currently short the XHB in the TRADER Portfolio of the ETF Bulletin newsletter.} Outside of ETFs we have a number of plays that we are looking at for clients and one that we have owned a few months that is up over 20% and pays an 18% annual dividend. There is money to be made from this theme, you just need to be selective and do your homework.