Will the Spring Selling Season Scatter Homebuilding Bears?

Short Sellers who overstayed their welcome in homebuilding stocks have been battered thus far in 2008. Bears continue to scoff at any suggestion of a turnaround in the resale market, but insiders at the publicly traded homebuilders are starting to nibble on stock, according to James Altucher:

Executives and directors at Pulte Homes , Hovnanian , KB Home and Lennar have all bought stocks in their companies in the past four months. FT

With weather warming up in the northeast we will soon have some answers. Realtors are working their spin, although you will have to take it with a grain of salt:

Jack Kreider, executive vice president of regional services at RE/MAX International, said that while it is too early for anything but anecdotal evidence, some of his company's real estate agents are convinced they have seen bottom.....Some open houses in trouble spots like Phoenix and Tucson, Arizona, and Las Vegas, Nevada, are pulling in multiple bids, he said. "It's been 18 months to two years since they were getting multiple offers." Reuters

Homebuilding bears are a vocal bunch, but a whiff of good news, however fleeting, could cause another scramble to cover. But it will not get really ugly until the S&P Homebuilding ETF (XHB) can bust through resistance at 24.50, a level that has already been tested twice in the last month.

Third time a charm?

XHB Three Month Chart

Whitney Tilson has a chance to cover here, but I doubt he has changed his mind from earlier this year:

Tilson comments from 2.25.08
Given that home prices are still way above trend line and that, we’re only seeing the tip of the foreclosure tidal wave today. It’s hard to see how we’re near a bottom in terms of the fundamentals or the stocks (barring a huge government bailout).

Until we can get Tilson’s latest thoughts you will have to satisfy yourself with Morningstar’s analysis; this interview with Pat Dorsey was filmed last week.

I wonder what Barney Frank is thinking. The homebuilders have traded higher since his media circus on March 13th.

Brokers feel a pulse in U.S. home market
Reuters

Why insiders are betting on homebuilders
FT
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