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In February, I wrote how real estate agents were increasingly embracing services from Trulia (TRLA) and Zillow (Z) in the wake of improving housing sales data.

Both companies have been enjoying rapid display and subscription revenue growth -- a trend which continued in the first quarter, according to Trulia.

A slate of bank settlements over Fannie Mae mortgages in January and February, including by home loan giant Bank of America (BAC), reflect the banking industries growing enthusiasm over home loans. The action has cleared the way to normalized lending markets, which should help ease standards and drive loan volumes.

Both Zillow and Trulia make the bulk of their money selling subscription services to real estate agents.

Historically, the real estate market has proven hyper competitive with individual agents willing to embrace services to win clients. The rise in home sales has improved agents outlook, increasing their willingness to buy such services; in turn providing tailwinds for both Trulia and Zillow.

In the first quarter, Trulia's sales almost doubled, increasing 97% to $24 million. The growth was nicely ahead of the $20.8-$21.2 million guidance issued by the company in its Q4 earnings release.

During the quarter, 52% more unique visitors landed on Trulia's site with visitors increasingly engaging via mobile, where unique visitors grew 122% to 11.4 million.

The company saw subscribers increase by 42%, or 3500 members, during the quarter.

And, those subscribers were more engaged too as average revenue per subscribers climbed 46% to $187.

The combination of more subscribers and higher revenue per member drove segment revenue to $17 million, 100% higher than last year.

An improving market for housing related advertising boosted media revenue.

In the quarter, Trulia was able to leverage higher visits and housing sales trends to land more advertising too. Sales in its media segment increased 91% to $6.6 million.

The advertising strength should continue in Q2 as trends suggest increasing demand for real estate content.

The first chart shows Google (GOOG) search trends for Trulia, which continue to make new highs.

(click to enlarge)

The second chart shows Google trends for Zillow, which are similar and suggest positive Q1 earnings when the company reports on May 7th.

(click to enlarge)

Admittedly, all isn't rosy at Trulia.

Despite the higher engagement, the company still couldn't translate sales growth into profits.

But, losses continue to move in the right direction with quarterly earnings per share of -$0.02 a vast improvement from the -$0.54 loss the year before.

Equally impressive, Trulia shares have moved up despite a 7 million follow on share offering in March, which raised $112.9 million for the company.

Since the end of February, Trulia investors have seen share prices climb 35%. Returns at Zillow have been even better, with shares up 38% since February 28th.

Importantly, those gains may not reflect all the opportunity in the two companies either. There are still more than three days of average volume to cover in Trulia and nearly nine days to cover in Zillow, suggesting additional good news for the two will support additional upside.

Source: Trulia Earnings Suggest Zillow Shorts Will Cover