Housing starts jumped 8.2% in April over March. The result surprised Wall Street and could be one of the first signals that housing markets are bottoming out.

When we look into the actual numbers - in terms of year-over-year growth - new building permits show double-digit declines for almost two years straight. However, April's data is the largest increase in 24-months, something builders are most likely rejoicing over. Within the report, though, all of the gains came from multifamily homes (apartments), while single-family homes actually declined month over month.

The Floor Plan of Contraction and Profit
Overall, contracting housing markets are shaving about 1% off of annual GDP, as witnessed in GDP growth of 0.6% in the fourth quarter of 2007 and the first quarter of 2008. (For more information, read The Importance Of Inflation And GDP.)

When we begin reading between the lines, the present scenario is really quite interesting. What we see is that in the past eight months, single-family homes have seen consecutive declines of new starts, while multifamily homes have witnessed four months (October 2007, January 2008, February 2008 and April 2008) of housing start increases.

The common sense explanation is that that, while fewer and fewer actual one-family homes are being built, savvy money has been taking the real estate downturn as an advantageous moment to purchase discounted property and build large buildings.

When real estate markets do recover (which may not be until 2009), those who invested heavily in real estate during this time, will likely see significant profits from their building bravado when everyone else was selling. It makes sense really. As the U.S. economy comes out of the slowdown, many consumers will likely be repairing their financial health at a tepid pace, while recovering from debt incurred in the tough months. These are the exact people who will likely be looking for cheaper real estate - like an apartment.

Builders who are scrambling to buy up property in the present environment could profit handsomely based on the "economic gauntlet" consumers have endured over the past year.

The Forgotten
At times like this, there's plenty of money to be made for those who invest like Warren Buffett and "buy when others are selling". Intuitively, we would probably want to look at the homebuilders as the pure plays for the real estate construction. Don't get me wrong; they're probably not a bad bet considering the Dow Jones U.S. Home Builders Index is up over 50% since the beginning of 2008. However, there's another angle to play here too: residential REITs.

• Camden Properties (NYSE:CPT), which is presently showing a forward dividend yield of 5.3%, while trading with a Forward PE of just under 14 and at 2.3 times book. The stock is down about 11% for the year, thus there certainly is risk; however, the dividend yield alone sure beats what Treasuries are paying.

• Apartment Investment & Management (NYSE:AIV) saw earnings slip negative in December of 2007. What we're talking about is a company that witnessed earnings growth of a little less than 75% per year over the past five years. Wall Street is now predicting the same company will average per-annum growth of 6.6% for the next five years. It also presently has a 5.9% forward dividend yield.

Bottom Line
The New Residential Construction report surprised analysts with a big gain in April, so the dismal estimates for REITs like Apartment Investment & Management and Camden Properties may also be surprisingly low, especially considering their dividend yields.

Considering investing in real estate? Read about th REIT and see if it's the investment for you in The REIT Way.