There is a simple reason why those smart "value" investors who bought the US Homebuilders in Q1 of 2008 are getting pummeled - like Lehman's "Level 3" assets, US Homes were marked to model, not to market.

In any economic situation with mounting inventories, eventually the dynamic of lower clearing prices evolves. US Pending Home Sales for the month of May was released this morning at -4.7%, down from the +7% reported in April.

Of course the revisionist historians can look back on April's rally in the US stock market (and the "housing is bottoming" thesis alike) as just another round of exuberant higher lows.

Marking US homes to market will reveal clearing prices that are much lower than those listed in your local real estate directory.