Real estate investments are rising in popularity as a combination of strong fundamentals, near-record-low mortgage rates and a drop in foreclosures supports the notion that housing is on a road to recovery.

Home prices rose for the 13th month in a row in March, jumping 10.5% year-over-year to post its biggest annual climb in seven years. Also, housing starts topped 1 million in March for the first time in nearly five years while home repossessions fell 20% in April from the previous month.

“Our positive view of the housing market remains on track,” Robert Wetenhall, RBC Capital Markets, said. “The key drivers include low interest rates, tight inventory levels and rising home prices.”

Investors looking to capitalize off the housing market can play the rebound through various exchange traded funds.

Homebuilder exchange traded funds continue to set multiyear highs this year after finishing among the top performers of 2012. The iShares Dow Jones U.S. Construction (ITB) and the SPDR S&P Homebuilders (XHB), which surged 74.6% and 53.1%, respectively, in 2012, are up more than 15% since January 1. But despite robust gains, both funds remain well below all-time highs set before the housing crisis.

Major U.S. homebuilders and home-improvement companies account for nearly 65% of ITB’s assets. The fund’s largest holdings are PulteGroup, DR Horton, Lennar and Toll Brothers. XHB offers a slightly more diversified play on housing with approximately 30% of its asset base allocated to homebuilding stocks. The fund’s top holdings are Lumber Liquidators, Ryland Group, Williams-Sonoma and Select Comfort Corporation.   

And if you are truly convinced a housing recovery is underway and are willing to take on more risk, leveraged exchange traded funds increase exposure and impact from the underlying index. The Direxion Daily Real Estate Bull 3x ETF (DRN), which provides three times the amount of exposure to the MSCI US REIT Index, is up 49.4% so far this year. The ProShares Ultra Real Estate ETF (URE), which offers double the exposure to daily returns of the Dow Jones U.S. Real Estate Index, is up 27.5% year-to-date.

The next key statistic on the housing market will be the NAHB survey on Wednesday.