It’s nice to know that Americans aren’t the only people in the world that believe real estate prices can never stop going up. Apparently the Chinese share our affinity for bubbles.

From MarketWatch, real estate prices in China are going through the roof:

For many financially challenged owners of a "McMansion," the theory of renting it out until the market comes back may not hold substance.

Consumers are still frozen under the weight of substantial debt as credit from financial institutions remains extremely tight, foreclosures and delinquencies are high, mortgage modifications have been a relative bust, wages are on the decline, jobs are being lost, taxes are poised to rise and too many houses still remain on the market.

A week after folding the second incarnation of its unique up/down crude oil funds due to the failure to attract sufficient investments, MacroShares burst back on to the scene with the launch of two new exchange-traded products (they’re not technically ETFs). The MacroShares Major Metro Housing Up (UMM) and Major Metro Housing Down (DMM) began trading on Tuesday. While these funds are attracting significant attention because of their unique strategies and exposure, they are also being greeted with a fair amount skepticism.

According to their fact sheets, DMM and UMM will track three times the cumulative percentage change in U.S. single-family home prices, as measured by the S&P/Case-Shiller Composite-10 Home Price Index. This benchmark is a frequently-monitored indicator of single-family home prices in ten major markets (New York, San Diego, San Francisco, Washington, D.C., Boston, Chicago, Denver, Las Vegas, Los Angeles, and Miami). After relatively steady appreciation since the early 1990s, this index has plunged over the last two years amidst spikes in foreclosures and freezing credit markets.

The expansive staff here at Running of the Bulls have been of the opinion that if the national residential housing market was not at the bottom, then it is closing in on one.

However, we have been at pains to note that even though the national data may be in the process of bottoming, the regional data bore wide disparities. Florida and California, for example, were probably at a bottom. Manhattan, however, was just at the beginning of their descent.

Yesterday, the U.S. Census Bureau released their May read of construction spending again demonstrating the significant extent to which private residential construction is contracting particularly for single family structures which appears to have worsened significantly in recent months while non-residential spending continues to show weakness.

With the tremendous weakening trend continuing, total residential construction spending fell 33.91% as compared to May 2008 and a whopping 64.48% from the peak set in March 2006.

Yesterday, the National Association of Realtors ((NAR)) released their Pending Home Sales Report for May showing a 6.7% year-over-year increase in pending home sales nationally but a surprisingly weak 0.7% year-over-year decline in pending sales seen in the heavily foreclosure laden markets of the west region.

Meanwhile, the NAR's chief economist Lawrence Yun continues to set the context by which the NAR (or specifically RPAC, their political action committee…) lobbies Congress for more lenient (and likely fraudulent) rules governing the home appraisal process.

The S&P/Case-Shiller ((CSI)) Home Price index together with the Radar Logic ((RPX)) for Boston represent the most accurate indicators of the true price movement for both single family homes and the entire residential real estate market as a whole (singles, multi and condos).

For April, both the CSI and RPX showed the typical spring bounce in price movement with a month-to-month increase of 0.43% to the CSI and a 7.06% gain on the RPX while on a year-over-year basis the CSI declined 7.71% while the RPX dropped 10.82% over the same period.

The Mortgage Bankers Association ((MBA)) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages, 1 year ARMs as well as application volume for both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

Tuesday’s S&P/Case-Shiller housing market data revealed some notable differences in the trends from one metro market to the next.

It’s important to recognize that while our current national residential real estate decline is truly historic and unprecedented, a near simultaneous decline of one or more major metro markets is not.

During the past week, several articles were released regarding appraisers relating to deals being killed because of bad appraisals. Several points in theses articles have a strong foundation for being valid.

On July 1, 2009 the FHFA announced that they were increasing the maximum LTV on agency held refinances from 105% to 125%.

This new guideline applies only to existing FNMA/FHLMC mortgages. As before, it does not allow cashout, or to payoff second mortgages or any other debts.

Can I borrow the full amount and an extra 25% too?

Apparently the answer to this question is yes. CNBC is reporting that home ‘owners’ who refinance their mortgages through loans backed by Fannie (FNM) and Freddie (FRE) will be able to borrow up to 125% of their homes’ value (hat tip Marshall Auerback). That’s not a typo: we’re talking no-money down and 25% cash back. Sign me up.

As an alternative, it might make sense for investors to consider the Claymore/Beacon Global Timber Index ETF (CUT). The fund's fact sheet outlines the following criterion for a stock's inclusion in the underlying index:

Wednesday the Census Bureau revised its estimates of construction spending January 2007-April 2009. The revision says that more of the INCREASE in non-residential construction spending occurred during 2007 than occurred in 2008 (to see the time series prior to the revision, see here). Still, non-residential construction is higher now than it was when the recession began.

Click to enlarge:

Here’s a mixed bag of economic reports. They won’t have you doing handsprings.

Per MarketWatch pending home sales were up 0.1% in May. That’s so small that is counts as nothing more than noise. At the same time, MarketWatch reports that mortgage applications for last week were down 18.9%. Applications for home purchases were off 4.5%.

By Dirk van Dijk

The April Case/Schiller Index shows that the decline in housing prices is not over yet. The best that can be said is that the rate of decline is slowing.