Exactly how many times can that dead cat bounce?

For the third consecutive day yesterday, shares of some of the biggest homebuilders rallied, rising more than 7%. Investors have rushed in to scoop up shares, believing that housing stocks have finally hit bottom, even if they don't expect the overall industry to improve any time soon.

Have we forgotten the similar phenomenon at the end of January, when investors assumed that housing had reached its nadir the preceding November? Lennar (NYSE:LEN) rose 8% in a span of three days, Centex (NYSE:CTX) was up 8.4%, and DR Horton (NYSE:DHI) jumped more than 10% before the weekend came. Investors were giddy with the thought that with housing's darkest days behind it, the spring selling season would get the industry back on track.

But spring never came for the builders, and rather than parting, the clouds of gloom got ever darker. Some builders, like Beazer Homes (NYSE:BZH), now totter at the edge of oblivion.

There's little wonder that investors want housing to come back. Fools can make some of their biggest profits in bleak times, when all the great value investors begin to salivate at the juicy rebounds to come. But enter the market too soon, and you'll be left holding the tail of the proverbial lifeless feline. From the February peak to the end of last week -- just before investors became heartened by the words of a lone analyst who upgraded the sector -- shares in homebuilders fell a collective 61%. Beazer and Hovnanian (NYSE:HOV) were the worst off, down 81% and 66%, respectively.

All the current data indicates that housing isn't doing well, and won't be doing well for a very long time. According to its analysis of housing futures traded on the Chicago Mercantile Exchange, Tradition Financial Services says that home prices and housing sales may be depressed as far out as 2011. Moreover, inventories at the end of September were about 18% higher year over year.

With prices depressed, plentiful inventory, and lenders wary of extending themselves too far, too soon, homebuilders' chance of hammering out some decent numbers within the next few quarters seems remote. Just last week, both Lennar and KB Home (NYSE:KBH) reported steep losses.

While builders are trading at apparently low book values, they're still marking down and writing off assets. Depending upon how long the housing markets stay depressed, and how aggressively the builders have already marked down their assets, we could see book values drop even farther. So although Hovnanian trades at 48% of book value, and Beazer is at an astonishing 27% of book, Lennar, DR Horton, Centex trade at one to three times that value. That may be low historically, but perhaps not by current standards. Meanwhile, MDC Holdings (NYSE:MDC) still trades at a roughly even multiple to book value.

It may be moribund, but this cat still has claws, and it can scratch and wound an investor deeply. Beware.