The Case-Shiller index for December came out today (Feb 24,2009). Prices are still plunging of course. Although they are still falling, we can at least ask if the rate of decline is starting to stabilize. House prices are not like stocks. They don't move stochastically. The price changes are correlated. So the rate of change in price declines (the second derivative) will improve before the rate itself (the first derivative). Lets see if there is any evidence of this. The plot below shows the month-to-month rate of decline, annualized. I have done a seasonal correction and fit a 7th order polynomial to the data which is shown in red.
Looking at the red line, it appears that the annualized rate of price decline is about 20% and it at a maximum (that is most negative). There is some hint that we may be near the maximum rate of decline. The rate of decline will probably start to decrease slowly over 2009 but it will probably take a couple of years to get back to zero (price stability).
This of course is simply fitting the data and extrapolating and is not using any information about the economy, historic relationships of say price to rent, inventory levels etc. Still, I think it is useful since historically these house price bubbles have followed similar patterns. They always decline back to the mean, in real terms.