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Will the housing bubble burst? This is such a frequently asked question that it has become a cliche. But we think it's worth asking again. With the bond market betting that the Federal Reserve could start hiking short-term interest rates in just a few weeks, the major catalyst behind the housing boom could be near an end. No question, record home sales and a 7 percent annualized increase in home values have been fueled by record-low mortgage rates. More than 38 million Americans have refinanced their home mortgages, and more than 22 million homes have been sold since 2001. In the past few months, though, those markets have begun to slow down. Indeed, in late May the Commerce Department announced that sales of new homes fell 11.8 percent in April.

Paul Puryear sees rockier times ahead. Puryear, 55, used to be the CFO for the fast-food unit of building-materials company W.R. Grace. He also helped run a commercial real estate development company in Atlanta. He's been following real estate-related companies for Raymond James for the past decade. In 2001 he became one of the most vocal bulls on the sector. He stayed that way for three years, helping investors make 47 percent annually on his recommendations during that stretch. It's noteworthy, therefore, that in mid-May he lowered the rating on most of the stocks he covers from buy to hold. He says he isn't ready to tell people to sell, but he is also less excited than ever about the future. "Interest rates have been dropping for 20 years," Puryear says. "Unfortunately, we think they are now headed up."

Historically, that has meant trouble for housing stocks. In such a climate, investors need to be picky. Puryear suggests sticking to the companies that are best positioned to weather rising mortgage rates. Toll Brothers (TOL, $41), for example, sells primarily to higher-end homeowners, who are less sensitive to rate changes. It managed to grow revenues during the last three periods when mortgage rates spiked -- 1995, 1998, and 2000. And despite a 37 percent jump in profits for its most recent fiscal quarter, Toll Brothers shares trade at a modest P/E of ten. Perhaps best of all, the company has a record backlog of 6,225 homes to build in two dozen states, worth about $3.7 billion. That gives it a solid foundation for future growth.