Home Prices Rise for First time in 5 Years

According to the Zillow Home Value Index, prices for home in the US rose by 0.2% year/year in the second quarter for its first gain since 2007. The average price for a home is now $149,300 and the increase was brought on by a boost in demand for homes, record low interest rates, and a tight supply of properties for sale.

Zillow goes on to say, " The solid Q2 in the midst of economic headwinds indicates the housing market has some organic fundamental strength on its own."

The homebuilders and related stocks have been outperformers this year and got a boost yesterday when Goldman Sachs upgraded the sector.

Some of our favorite homebuilders include: Lennar ($LEN), Toll Brothers ($TOL), along with two ETFs ($XHB and $ITB).

Housing Numbers Not Improving - But Bottom Is Here?

The Case-Shiller 2011 year-end readings show that all three major indices (national, 20-city, and 10-city) close at their lowest readings ever. Numbers last week showed housing prices fell 2.4% in 2011, but increased during the fourth quarter of the year.

The numbers continue to be weak, however the magnitude of the downtrend has slowed dramatically and this could be a major step in forming the bottoming process. If the home-related stocks are any indication, the bottom will be found in the very near future. The iShares Home Construction ETF ($ITB) is up 16% in 2012 and well off the lows of early October. The ETF hit a 52-week high in early February.

I am not one to try and predict a bottom for any downtrend in the market or life. However, my gut tells me that a bottom is near for the housing market as long as another black swan does not appear in the sky.