Pending home sales were up again last month for a sixth month in a row. The housing market has been a significant drag on the economy and may be one of the root causes of the crises of the last two years, so good news continues to be very welcome.

When you consider this week's pending home sales numbers in combination with the recent uptick in housing price indexes there seems to be reason for optimism. Homebuilding stocks are also up significantly since the bottom earlier this year and real estate in general seems like it may be turning into a profitable asset class again.

Interesting post from Bespoke Investment Group this morning segmenting out house price declines in different communities around the U.S.

Needless to say, prices are continuing their downward plunge, and some places have been hit harder than others.

Some takeaways from the article:

• Using the S&P/Case-Shiller Median Home Price indices to measure drops from house price peaks until now, Bespoke's 10-city index is down 9.4%;
• San Diego has fallen the most at -16.3%, followed by Miami (-15.3%) and Las Vegas (-14%);
• Chicago has fallen the least from its peak at -4.1%;
• Almost all cities (Charlotte appears to be the exception) are down below 1992 prices

How does an investor play this amazing 15-year reversal?

If investors believe we're beginning to reach a bottom (big assumption), take a look at REIT (Real Estate Investment Trusts) ETFs: iShares Cohen & Steers Realty Majors Index Fund (ICF), iShares Dow Jones U.S. Real Estate Index Fund (IYR), iShares FTSE NAREIT Real Estate 50 Index (FTY)

Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

After loosely tracking the U.S. publicly traded real estate sector for more than a decade, foreign property shares have been on a relative performance tear, significantly beating their American counterparts over the course of the past two years.

Since last April, the Dow Jones Wilshire Ex-U.S. Real Estate Securities Index (which has an equivalent U.S. exchange-traded fund, or ETF (NYSE: RWX)) has outperformed the Dow Jones U.S. Real Estate Index (NYSE: IYR) by 13.8%; over two years, the relative gain has been 22.9%. While some of the difference is accounted for by weakness in the dollar -- the U.S. Dollar Index has fallen by 5.6% and 3.7% over one and two years, respectively -- the bulk of the gains have come from absolute performance in local currency terms.

Yesterday, however, Spanish property shares were hit by a wave of selling, with worries regarding a small but high-flying builder, Astroc Mediterraneo SA, serving as the ostensible catalyst. Following on from that, investors also began paying attention to the fact that more than 800,000 homes were built in Spain last year, "leaving a glut of property hanging over the market," according to a report in the London Daily Telegraph.

The U.S. real estate sector, meanwhile, has been lagging the benchmark S&P 500 Index since March, amid growing signs that problems related to the bursting housing bubble and the meltdown in the subprime finance sector are spreading outward.

With Spanish property shares remaining unsettled today, despite a bounce in that and other European markets, the recent turmoil could be an early warning sign marking the beginning of the end for foreign property shares -- and, perhaps, a sign of much more trouble to come for the real estate industry as a whole.

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle: An Insider's Guide to Successful Investing in a Changing World.