INVESTING - Is now a good time to buy into builders? - Many firms' shares have fallen with the housing market. Some say the sector is ripe for bargain hunters; others say wait.

But that didn't stop the Manhattan Beach money manager from giving his clients this advice last week: Buy housing stocks.

"If you look back five or six years from now, people will say, 'Wow, those are great stocks to own,' " Bollinger said. "And if you explain to them [the price at which] you bought, people will think you're lying."

It takes guts to recommend shares of home-building companies right now. Not only is housing in the throes of a historic contraction, but most experts also say the deterioration of the market isn't over.

The government reported last week that construction of new homes plunged 19% in August from a year earlier, marking the slowest pace in more than 12 years.

Builders trying to unload inventory are increasingly resorting to gimmicks -- such as New Jersey-based Hovnanian Enterprises Inc.'s "Deal of the Century" sale this month or Irvine-based Standard Pacific Corp.'s "Mission: Possible" promotion.

The carnage in construction stocks has been breathtaking.

Centex Corp. closed Friday at $27.17, down from almost $80 in early 2006. D.R. Horton Inc. has fallen to $14.10 from almost $42. And Lennar Corp. has slumped to $25.32 from more than $66.

Bollinger's buy recommendation is rooted in a long-established stock market dynamic: A company's shares usually recover long before its business or financial results do. By the time a recovery is widely apparent, the best bargains are gone.

"The news is going to remain negative long after the bottom [for the stocks] has been seen," said Paul Desmond, president of Lowry Research Corp., a stock research firm in North Palm Beach, Fla.

How long? Desmond estimates that earnings reports and industry news won't show improvement for six to nine months after a recovery is underway.

So the question is whether an industry rebound will come soon enough to invest in housing stocks now. Many analysts say it's still too early to invest in the industry, arguing that other sectors will do much better in the next couple of years.

The performance of builder stocks last week illustrates how hard it is to identify the time to buy. A Standard & Poor's Corp. index of 16 home builders rose 6% on Tuesday after the Federal Reserve cut its benchmark interest rate.

But it fell 6% two days later and is now lower than before the Fed move.