The housing market has been dominated by buyers for years, but the latest
existing home sales data suggests that may finally be changing. And Wall Street is starting to buy in.

A simple definition of a “buyer’s market” is that the buyer holds the cards.
They determine what they are willing to pay, then wait for the seller to call.

No where has that been more evident in real estate, where for years a growing number of desperate sellers have had to appease low-ball bidders.

Whatever comparable sales suggest the real value of the home to be, the only
real price is what the buyer and seller agree to. As prices continued to fall,
buyers became more determined to pay less than comparable value.

What was different about June existing home sales data released Thursday was that, not only did sales rise for three-straight months, the longest such
stretch since June 2003, the National Association of Realtors said “many”
realtors reported deals didn’t close because appraisals were less than the
agreed-upon sale price. The NAR said it hasn’t published data on this sort of
thing before, but that’s because it was never a problem.

“In many cases, normal homes are being compared with distressed homes sold at a discount, which often are in subpar condition ,” said Lawrence Yun, the NAR’s chief economist. It seems out-of-area appraisers are using computer models that don’t take into account whether a home is “distressed” or “normal.” But that’sbeside the point.

The fact that this has suddenly become a problem might indicate sellers are
becoming less desperate to meet buyer demands, or buyers are more willing to move to the seller.

Either way, Wall Street seems to believe it’s a good sign for housing stocks.

The iShares DJ US Home Construction exchange traded fund (ITB) surged 5.2% to $11.36 on Thursday and 24% over nine sessions, putting the ITB above the 200-day simple moving average and a weekly downtrend line that started in June2007.

The next key level of interest is $11.90 to $12.10, where there were a number
of previous highs in May and December 2008. But even if it fails on the first
attempt, any pullback is likely to be shallow and short lived.

There should be strong support as high as the $10.50 to $10.70 level, which
was a previous area of strong resistance, but don’t expect a pullback to go
quite that far. The relatively low levels of volume during the recent rapid
rally suggests many willing buyers probably missed the move, and may be more than willing to step in ahead of support.