I think what Krugman forgets is that aside from every month being a new "housing bottom," every little slightly-less-than-awful news was talked up as a sign that Everything Is Turning Around.
But even if those things were signs that things were turning around, there were never any signs that things were actually getting better. Getting worse not quite as fast may be a bit of a hopey sign that things might get better, but it isn't the same as actually getting better.
