Homebuilders Finally Nearing the Bottom

The Nasdaq had to fall 75% from its peak before it hit bottom. Homebuilding stocks, by contrast, have so far fallen 63%. (When the Nasdaq was down this far, it was at 1,900.) If this burst bubble follows the last one, homebuilding shares will have to fall another third before the slump ends.

The sector has been in a rout all summer, falling by double digits each month.

But has the decline started to slow? Keep an eye on the Home Construction iShares. Since Aug. 15, it's only eased 58 cents, to $23.10, despite further waves of gloomy headlines.

Maybe I'm looking too hard for contrarian signs that the end of the slump is near. This could be a pause before another slide.

But at times like these it is hard to keep in mind the obvious point that the shares on Wall Street are, obviously, a lot closer to the bottom than they are to the top.

My guess is that gutsy long-term investors may find a great buying opportunity in this sector sometime this fall.