Earlier this month, Deutsche Bank (NYSE:DB) released a startling report projecting that roughly 25 million homeowners could be underwater on their mortgage loans by 2011. In other words, the amount owed to a lender would exceed the market value of the home. That figure translates to roughly half of outstanding residential mortgages.

And people are talking about a housing bottom today? Despite the share price recoveries among beaten-down builders like Lennar (NYSE:LEN) and D.R. Horton (NYSE:DHI), I remain skeptical.

Housing bulls can claim a slowing of delinquencies lately, but take a look at delinquency cure rates. These measure the percentage of loans exiting delinquency and returning to their current payment status each month. According to Fitch, cure rates for prime loans are down from 45% in the 2000-2006 time frame to just 6.6% today. That isn't much different than the cure rate for Alt-A or subprime loans.

Bottom line: Barely anyone falling behind on payments is managing to claw his or her way back.

I know optimism is back, but simply focusing on the rate of mortgage loans entering delinquency can lead to a false impression of housing's current health. This is like looking at the unemployment rate while ignoring the number of discouraged workers not bothering to look for work, or all the part-time workers who desire, but can't find, more hours. The dampening effect that part-time and discouraged workers will have on a recovery in the unemployment picture is analogous to the one low cure rates ought to have in housing.

These abysmal cure rates, just one symptom of the housing disease, signal to me that recovery is still quite a ways off. That's far from the only reason I'll be staying away from Pulte Homes (NYSE:PHM) and Ryland Group (NYSE:RYL), but it is one reason.

Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile or follow his articles using Twitter or RSS. The Motley Fool has a disclosure policy.