Stocks are seesawing this afternoon about housing construction data tumbled to a record low.

At 2:57 pm ET, the Russell 2000 (NYSE:IWM) is up 0.63%, while the Dow is up 0.27% and the S&P 500 is up 0.63%.

The Commerce Department reported this morning that the construction of homes and apartments fell 12.8% last month to the lowest pace on records dating back a half-century. Analysts were expecting a rise.

Small-cap semiconductor company Kulicke and Soffa Industries Inc. (Nasdaq:KLIC) is up 28% this afternoon after it increased its revenue outlook for the third fiscal quarter. Formula Systems (Nasdaq:FORTY) has climbed 23% after reporting a rise in Q1 profit, and Lifeway Foods Inc. (Nasdaq:LWAY) is 20% after reporting record first-quarter 2009 revenues and earnings.

*****Stocks are down this morning after a “surprise” drop in new housing starts and a fall in new building permit applications. This shouldn’t really be a surprise. After all, we are in a recovering economy, and that means progress will come in fits and starts. And since housing was the underlying cause of the last run-up and a major contributor to the market slide, there should be no question that we’ll see “surprises” like this going forward.

Recall that we’ve seen some upside surprises from the housing market in recent weeks. Yesterday’s big move was attributed, in part, to an improvement in a homebuilders confidence survey. A little bad news to balance out the good should be expected.

Still, the data from April represents a new all-time low for housing starts on an annualized basis. Year over year, housing starts are down 54%, and the housing market was already headed down then.

If there is a bright side, it’s in the understanding that economic sectors, like the stock market, have to bottom out before they can improve. We could be seeing the housing market bottoming out now.

Bell-weather homebuilder Toll Brothers (NYSE:TOL) reports tomorrow. Toll Brothers is a major player in new home construction so look to them as a bellwether . . .

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