From the AP
Housing prices dropped in February at the fastest rate ever, a widely watched index showed on Tuesday, reflecting that the housing slump is gaining momentum and showing no signs of letting up.
The Standard & Poor's/Case-Shiller home price index of 20 cities fell by 12.7 percent in February versus last year, the largest decline since its inception in 2001. Seventeen of the 20 metro areas reported record annual declines.
Here's the short version to how I am reading the housing market right now. There is already a ton of supply. With foreclosures increasing at incredibly high rates supply will obviously increase. At the same time, US consumers are faced with record levels of household debt and payments on that debt, a tanking job market and declining income. In other words, supply and demand of the housing market is seriously out of whack which will lead to declining home prices for the foreseeable future. (here's a link with tons of charts)
As a result of all this, home prices will have to drop in a big way -- which they already are.
Here's a link to the Case Chiller Press Release.