Is that even a reasonable question? One could respond, which housing market? -i.e., the one here in the Northwest Suburbs or the one in Miami, Florida? They’re totally different markets.
Real estate markets are largely local phenomena which depend on fundamentals like access to jobs, regional employment, types of local industry and the desirability of land in a given area. Lake front housing tends to go for more than, say, landfill-front property. 
It is location, location, location; we all know that.
But, national factors do a play a significant role in local markets. So, we need to pay attention to national headlines, and, of course, temper bad news and good news with reflection on local conditions. All that being said, what the heck is going on?
Real estate is supposed to be a relatively safe, boring market. If you have good jobs in your area and a nice quality of life with good schools, parks, and a Chipotle nearby, buying a house is supposed to be a low risk investment.
Reading the news today, you wouldn’t get that impression. The market is in flux. I recently wrote that sales were down 58% in Barrington in the first quarter over 2007, but prices were up almost 6% (first quarter report). That doesn’t make any sense, but it’s true. The ever-changing news stories are just as confusing: Fannie Mae and Freddie Mac are in dire straits (see last post). . . .oh, no, maybe it’s not so bad . . .
I feel obligated to read the financial news every day, but I am also forcing myself to remember that homes in our area are not going to lose their value the way stocks do. The Barrington-Palatine-Inverness area has been steady with regard to pricing.
I think I am going to read more about Warren Buffett for a while. His cool head and sober mind may be a good antidote to the reigning confusion.
