It was a busy week on the economic announcement front. Lots of housing and real estate data, in particular, was spewed forth from the media machine without putting it all in its proper perspective. I want to change that today, and post a few charts that the media should have. This visual representation really makes it clear what's going well - and what's not yet - for real estate. First though, let's examine the recent comments on Daktronics (DAKT), Delta Petroleum (DPTR), InterDigital (IDCC), rue21 (RUE), and Safeway (SWY). They each appear to be the most action-worthy from this week's write-ups in the community part of the site. .   Stocks In Focus Did Safeway Give Us a Grocer Green Light? WINN, KR, SWY, SUSS Safeway Inc. (NYSE: SWY) rallied sharply yesterday after announcing that the worst of the deflation phase had likely been seen. As such, grocery stores were apt to no longer be trapped between a rock (lower retail prices), and a hard place (higher inventory costs). Safeway Inc., while probably the least compelling name among grocers, may have given a 'buy' signal for other, more undervalued grocery store stocks.  Everybody Wants Some: FTWR, RUE, QNST Though the stock's not been around all that long, rue21 Inc. (NASDAQ:RUE) has managed to make quite a splash so far, gaining about 20% since its debut. More importantly, though young, Dennis Askew has seen enough attention to inventory control measures that he's calling rue21 Inc. an outright 'long term buy'. The company updated per-share guidance for its prior quarter... higher. Is it the first of many for RUE?  Chart Forecasts for IDCC, DNDN, WDRP The future does not look bright for InterDigital, Inc. (NASDAQ:IDCC). Regardless of the company's technical merits, IDCC shares have put themselves into a pattern that right now is applying a great deal of selling pressure. The technical analysis (the chart is marked in such a way that makes it crystal clear) suggest that InterDigital, Inc. may not be able to find support again until the $16 area.  Technical Review of OPXA, CRIS, and DPTR  You'll want to put Delta Petroleum Corp. (NASDAQ:DPTR) on your watchlist. Why? Because the stock's been chipping away at resistance for weeks, and eventually should have success. When it does, it could soar. James Brumley's chart analysis of DPTR shows specifically why the $1.49 is so important, and why it could be so bullish for Delta Petroleum Corp. once hurdled.  Fear and Panic Stress Prices: AGYS, AATI, DAKT  Is Daktronics Inc. (NASDAQ:DAKT) a short squeeze waiting to happen? Could be. The stock's a technical buy anyway, having just pushed off the lower edge of a trading range anyway. With a short interest of 15% though, the recent move from $7.20 back to $7.80 may be spooking those short position owners. In short (no pun intended) Daktronics Inc. offers a lot of near-term upside potential.   Home Sales in Perspective Though news coverage of the housing and real estate crisis makes the arena seem incredibly complex, it's not. There are really only thee basic components to it - homes purchased, the number of homes currently for sale, and the average selling price. Each of those factors points to supply and/or demand, which ultimately points to the strength or weakness of the consumer.  Why the media never shows you the charts I'm about to is something I'll never know - a picture does say 1000 words. Since they didn't, however, I will. I'll also add some perspective on each of these components, beginning with existing homes sales.  Note the chart to the right moves from top to bottom with my comments on these data sets (and here's a full-screen shot of it).  Existing Home Sales  Don't sweat the slight dip we saw in the number of existing homes we saw sold last month. The 7.2% dip from December's annualized rate of 5.4 million to January's 5.05 million sold homes is actually a normal, seasonal ebb. The fact that purchases soared through November to levels not seen since February of 2007 also (unfairly) set the bar pretty high. January's sales were still well above homes sales from a year ago, and even two years ago.  Existing Homes For Sale  Total inventory levels fell to 3.26 million last month - the lowest reading in years (since 2006, to be precise). This may well be the best thing the real estate market has going for it. Yes, there's the chatter of the so-called 'phantom market' of houses that would-be on the market were the environment better, and houses that will be in the market as soon as the market does find a better footing. While I have no doubt there's some of that out there, if there was a lot of it waiting in the wings, we would have seen at least a little of it by now. We haven't.  New Homes Sales This may be the biggest stunner of all.  I don't know if you noticed this or not, but homebuilder stocks are among the biggest gainers over the last twelve months, up 60% on average.  The investment community's assumption is that these homebuilders - after being hammered for years - are finally seeing the light of day and are investment worthy again. In fact, many of them are starting to build 'spec' homes (houses that are built without a buyer yet) again, hoping to have inventory ready when the economy bounces back later this year.  Big mistake. New homes sales hit a multi-year low of 309,000 in January. Keep reading though.... it gets worse.  New Homes For Sale  As of January, the total number of new homes for sale in the United States was 233,000 - right where December left off. At current selling rates, that represent about 9.1 months' worth of supply, which is slightly higher than the 7.7 month supply we had managed to whittle into inventory levels during the third quarter of last year.  And therein lies the horse race.  Inventories of new homes have been shrinking for the last twelve months, while new home sales were actually increasing. That's how the average months' supply fell from 12.4 last January to below 8.0 six months later. It all changed in November though, when sales fell off a cliff but inventory didn't. That's how we got a 180 degree turn in the average time spent on the market.  In other words, it went from bad to worse.  You should note that this is not necessarily a real estate killer, as new home sales are only a small fraction of total home sales in the United States. It clearly does not bode well for homebuilders though. In fact, that poor reading is just another lower score in what's actually a long-standing trend.  Average Selling Price  The average price of a sold home fell the $254,500 last month, from December's average of $274,400. It was also the lowest average since about this time last year... a tumble that was likely the result of a swell and retreat in prices due to the home purchase tax credit. There are those who would argue that this is more of a seasonal effect than a reflection of the current demand for housing. Those people would be wrong though. If anything, prices tend to be slightly higher than average in the beginning of the year. In other words, January's sharp price pullback is even more concerning than the media made it seem... one of the rare cases where they didn't make a big deal of it, but probably should have. Still, prices are higher than they were a year ago; let's not panic just yet.  Putting It All Together  So what does this mean in the bigger picture? Considering all the factors in question, there are a couple of reasonable conclusions to be made. The first is, we're entering a stable environment again, at least on the existing homes sales front (which is about 85% of the real estate market). It's not better, but 'not worse' is acceptable for now. That bodes well for the economy, though it doesn't necessarily mean stocks are poised to race higher.  The second conclusion? New real estate, and homebuilders by extension, are still in dire straits.  I think this new/existing home disparity may be a function of the fact that existing homes - on a square foot basis - tend to be much more affordable than new construction. If you don't believe it, ask you insurance company what it would cost to replace your house versus what you can actually sell your house for. (You may find you're underinsured.)  Bottom line: It's not great, but there's a light at the end of the tunnel. Inventories aren't at ridiculous levels, prices have shown they can rise, and existing homes sales started to rise early in 2009 without the assistance of a tax break. It 'feels' bad now because the artificial stimulus took things too far through November. Not all the declines since then represent the resumption of olds trends though.   We Value Your Feedback Got comments, questions or suggestions? Send 'em on over: Email the Editor If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC  4653 Carmel Mtn Rd  Suite 308 #402  San Diego, CA 92130   Share the SCN Newsletter If you find the Small Cap Network Newsletter informative and profitable, please forward our newsletter alert service to like-minded friends and associates who share similar market interests.   Ensure Newsletter Delivery To ensure newsletter delivery, you can add any additional email addresses you may have to the Small Cap Network Member List. Receiving the Small Cap Network Newsletter in multiple locations is the best way of making sure you don't miss the next investing or trading opportunity! For web based email addresses, the Small Cap Network recommends @yahoo.com or @aol.com for timely and reliable email newsletter delivery.   Change Your Subscription Settings