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The U.S. Home Construction Index, comprised of the stocks of the country’s largest homebuilders, has now declined over 80% since topping out in the Summer of 2005.

However, it now looks to me like the index may be close to finding a bottom. While prices have made lower lows over the past few months, selling momentum has begun to slow.

This is almost the exact mirror image of the topping process we saw over three years ago that foreshadowed the subsequent top of the real estate market. If, indeed, the Homebuilder Index finds a bottom over the next few months it may suggest again that the real estate market may not be far behind.

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