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Housing: The Next Big
Sector to Rally?

With the S&P 500 up some 20% from the lows, and the Nasdaq solidly in positive territory for 2009, we can safely say that a bottom has been reached in the overall market.

But what about the housing sector? This was, after all, where the market downturn started.

Over the last year or so, there have been multiple calls of the bottom. Those predictions have all failed. The housing sector continues to be weighed down by rising foreclosures and falling prices. Inventory remains persistently high, and homebuilders are applying for fewer permits for new construction. These are hardly fertile grounds for homebuilding companies to make and grow profits.

But recently, the picture has changed. Home sales are showing some strength. Yet prices continue to fall. Why?

The decline in price can be attributed to auction liquidation of bank-owned and foreclosed properties. I suspect things are better than they seem, and that the elusive bottom is here.

Here then are four housing stocks that are well-positioned for a turnaround...

NEXT: Housing Stock #1: Pulte Homes (PHM)