All of the major business sites are reporting that home prices are down 15.8% from a year ago according to Case-Schiller data.  Marketwatch says:

"Prices in 10 cities fell 16.9% in the past year.  Prices thus are at the same levels as they were in the summer of 2004, which means four years of appreciation have been effectively wiped out. Prices are down 18.4% from peak levels seen two years ago."

The WSJ added:

"On a month-to month basis, the 10-market survey declined 1% in May and the 20-market survey dropped by 0.9% Not all the data were negative. Of the 20 markets tracked, house prices rose in seven in May from April. But many economists said the housing market has yet to bottom out nationally because home supply still outstrips demand."

And Fortune says:

"The 20-city index's Sun Belt cities, which recorded the biggest price gains during the boom, have led the charge down. Las Vegas prices have plummeted 28.4% during the past 12 months; Miami prices fell 28.3%; and Phoenix homes lost 26.5% of their value.

Midwest metro areas, which have endured tough economic times for years, are also feeling the pain. Detroit prices are off 17.4% for the 12 months, and Cleveland is down 8%.

Northeast cities like Boston, down 6.2% for the 12 months, and New York, off 7.9%, have been less volatile than the Sun Belt."

Because Mays decline from April prices was only 1% versus a 1.5% decline the previous month, analysts are optimistic we have reached a bottom.  From Fortune again:

""The smaller price decline in May suggests, provides a first hint, that conditions may start improving," said Mike Moran, the chief economist for Daiwa Securities America.

"If you look at home sales data, they're starting to stabilize," he said. "Some potential buyers have decided to step back into the market. They see attractive opportunities. I don't think the correction is over but the tone is improving."

I wish I could feel as optimistic.  Look at the data.  The amount of home inventory is at a record high and growing.  Foreclosure only adds to this problem. 

The real estate bubble really started in earnest in 2001 and I fear that we'll have to come down to close to those levels before we see the end in site.  The banks support this contention.  Bank stock prices are down at 2001 levels.  Then look at what Merrill Lynch did today.  It markes its CDO portfolio, which is backed by tens of thousands of mortgages, down to $.20 to the dollar.  That means they expect that 80% of the mortgages that make up those CDOs will fail.  80%!  Now, obviously this is a bit of a firesale and 80% is a bit high.  But even if 50% fail the results would be catastrophic for home prices.

Don't let anyone fool you.  We still have a lot of rough days to go.