Housing Meltdown Still Has a Ways to Go

Tuesday, Feb. 5, 2008 5:21 p.m. EST

Think the housing meltdown has hit bottom? Despite growing optimism that the worst is over and a 49 percent gain in S&P homebuilder stocks for two weeks last month, other signs indicate the housing storm is still gathering force.

For starters, the government announced on Jan. 30 that annual economic growth slowed to just 0.6 percent in the fourth quarter. Home construction fell to a 24 percent annual growth rate.

In addition, the S&P/Case-Shiller 20-city home price index fell 7.7 percent in November from the previous year. That was the biggest decline since the index was created in 2000.

"We now see potential for another 25% to 30% downside over the next two years,â€