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From the wire:

Housing Stocks Become Hot Item – By Colin Barr, Fortune, by way of

Investors who bought housing stocks at the beginning of the year after two and a half years of steep declines are being rewarded for their prescience.

As the Federal Reserve started cutting interest rates, the stocks of home builders Toll Brothers, Lennar, and Hovnanian rose 40 percent, 52 percent, and 96 percent respectively.

… “Stocks are predictive of the industry about six to nine months ahead of time,” adds Justin Walters of Bespoke Investment Group in Harrison, N.Y. He says he is bullish on the sector, noting that house-price futures at the Chicago Mercantile Exchange have been forecasting a bottom in house prices in many U.S. markets toward the end of 2008 …

While it’s true that some housing-related stocks have gone up this year, it only looks impressive because of how far they had fallen.

Toll Brothers, for example, reached over $35 a share, twice in the past two years, but hit a low of $15.49 in December 2007.

Everything is relative, I guess. (And, I’m not sure I’d call investors’ actions “prescience”.)

What do you think? Is there reason to be optimistic that the housing market will stabilize and (more importantly) that the US economy will avoid a recession?

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