OK, Fools, the housing debacle is about over. Buy the homebuilders like there's no tomorrow.

Of course, I'm just kidding, although the above sentiment could be an easy takeaway from the drivel being put out by the absurdly optimistic National Association of Realtors. In fact, the group's lack of touch with reality continues even in the face of November's 19.2% year-over-year drop in its own index of pending existing home sales, which the group reported on Tuesday. That was the same day the association's chief economist dreamt aloud that a meaningful recovery in pre-owned homes could begin "as early as this spring."

Sure. And KB Home (NYSE: KBH) was only kidding when it also reported on Tuesday that it had lost $772.7 million, or $9.99 a share, in the most recent quarter. While a slug of that loss was tied to a $514.2 million non-cash charge related to changed accounting for tax purposes, it was also difficult to find much positive sentiment in the conference call following the release.

For what it's worth, I judge KB Home to be one of the national builders with staying power. Management has impressively strengthened the balance sheet and reduced the number of communities in which the company is active by about 30%. And KB is far more circumspect about tossing up spec homes than are most of its peers.

Nevertheless, with many of its would-be buyers unable to unload their current homes, the company still experienced a 58% order cancellation rate during the quarter, the same as in the year-over-year period. As a result, management is endeavoring to lower KB's average price point to cater more to first-time buyers who usually don't have another home to sell.

During the conference call, Jeffrey Mezger, KB Home's CEO noted, "As we enter 2008, we see no indication that markets are stabilizing." In the next few weeks, other homebuilders such as Centex (NYSE: CTX) and Ryland (NYSE: RYL), along with mortgage lender Countrywide (NYSE: CFC), will tell us about their quarters.

It'll be interesting to observe whether those companies agree with Mr. Mezger's market assessment or whether they edge over to the fantasy world inhabited by the six percenters.

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Fool contributor David Lee Smith, a former homebuilding dart thrower, doesn't have positions in any of the companies mentioned. He does welcome your questions, comments, or kibitzing. The Fool has an entry-level, yet luxury, disclosure policy.