This sounds like a market working perfectly. While the rest of the media is clamoring about the real estate market experiencing its biggest drop in home prices in 35 years, the smart money was watching 2 other statistics. Rental prices are rising very quickly and homes are selling at a higher rate than was to be expected.
So it sounds like a market that was oversold is correcting and demand is building up. To read more about how housing market economics work and more on todays housing announcement, go to the Real Estate Bloggers for the rest.